CRE investors have gotten a rude reminder of how badly investments can go. Those in the AAA tranche of $308 million debt backed by 1740 Broadway in midtown Manhattan received only 74% of their money, in May. The loan sold at a steep discount. Creditors in the five lower groups were totally wiped out.

The 1740 Building was formerly called the Mutual of New York, or MONY, building. It was bought for $605 million by Blackstone in 2014. To help finance the deal the firm took out a $308 million mortgage, which was packaged into a CMBS and scooped up by the likes of Travelers Cos., Endurance American Insurance Co., and others.

A terrible case, but what are the broader implications? Did rating firms slip as they did in the time leading up to the Global Financial Crisis? Reuters has an explanation of the events. They may not be a systemic problem as happened nearly two decades ago, but observing what can go wrong in current circumstances is important for any investor's risk management.