CMBS Loans Show More Volatility in the D.C. Market


Washington D.C. Capitol Building (Photo: Getty).
Washington D.C. Capitol Building (Photo: Getty).

It’s a busy month for the special servicers.

SEE ALSO: DC Delinquent: Chasing Down the Worst Offenders in the Capital of Bad CMBS Debt

With the Washington metropolitan area office market in turmoil—due to ongoing tenant departures and government downsizing—four CMBS loans on D.C. area properties were recently flagged, according to data from Trepp provided to Commercial Observer.

A $54.6 million securitized loan on Two Rockledge Centre in Bethesda, Md., which matures on July 1, was sent to special servicer Torchlight Loan Services this month, the data show. The borrower, Rockledge CF LLC, requested an extension, stating that “the loan will not be able to be paid off due to ongoing negotiations with the GSA tenant occupying 100 percent of the space,” according to the special servicer commentary.

The loan’s collateral is a 247,130-square-foot office building at 6701 Rockledge Drive, which was completed in 1985. Bank of America originated the debt in February 2006.

A $64 million securitized loan on 2000 Corporate Ridge Road in McLean, Va., received an appraisal reduction of more than 25 percent of its $61.6 million balance after heading to special servicer C-III Asset Management in June 2014. Deutsche Bank originated the debt in June 2006.

In January 2015, the property lost its anchor tenant, Logistic Management Institute, which had occupied 84.5 percent of the 256,022-square-foot office building, according to the loan documents.

A $116.6 million securitized loan on the Chevy Chase Center in Chevy Chase, Md., was sent to special servicer CWCapital Asset Management this month, according to the data from Trepp. UBS originated the debt in October 2006.

The loan, which has a current balance of $87.1 million, was flagged in May after servicer watchlist notes showed that several tenants did not plan to renew their leases in the coming years.

The collateral for the loan, which represents 10.3 percent of the LBUBS 2008-C1 CMBS deal, is a five-building, mixed-use complex at 5425 Wisconsin Avenue comprised of nearly 400,000 square feet.

While the property is more than 90 percent occupied, the borrower noted that several retail tenants will likely close up shop in the next few years. The May watchlist notes indicate that many of the center’s retail shops have experienced weak sales and are expected to leave at the expiration of their leases or will require significant rent reductions in order to stay at the center.

To top off the recent string of loan changes, a $108.9 million securitized deal on Greensboro Park at 8180-8200 Greensboro Drive in McLean, Va., which has a balance of $106.9 million, was modified for a second time this month. The loan, which Lehman Brothers originated in May 2007, was first sent to special servicer LNR Partners in April 2010 and became delinquent a few months later. The debt received a three-year extension in 2011.

The Greensboro Park loan has been modified again after reaching the end of its first extension, June remittance data show. The loan has been extended another two years to June 2017 and the borrower has an option to extend for an additional 12 months.

“Seeing tenant departures in these D.C. properties fits the recent trend that has plagued the market,” Sean Barrie, an analyst with Trepp, told CO. “Although the market’s delinquency rate is in line with the national pace, seeing numerous tenants leaving suburban spaces is something investors will want to see remedied.”