Finance  ·  Distress

JPMorgan Chase Assumes Ownership of Distressed D.C. Office Property

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An office property in Washington, D.C.’s Golden Triangle Business Improvement District was handed back to its lender at a steep discount.

An affiliate of JPMorgan Chase (JPM) acquired a 12-story office building at 1850 M Street NW for $37.5 million, which is 30 percent of the 1986-built asset’s assessed value, the Washington Business Journal reported, citing documents filed last week with the D.C. Recorder of Deeds. 

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The handing back of the keys from the building’s owner, an affiliate of Manulife Investment Management, occurred at an Aug. 3 foreclosure auction hosted by Alex Cooper Auctioneers.

The JPMorgan affiliate filed a foreclosure notice against the building owner in June 2023 when there was a $61 million balance owed on its note, the deed records show. Manulife took ownership of the 244,070-square-foot property in 1983 before transferring it to another entity in 2017 for $108.8 million, according to deeds. The Manulife entity, called Hancock Reit 1850M LLC, took out a $50.9 million loan in 2017 as part of the transfer that was upsized to $60.3 million a year later.

The 1850 M Street NW property is currently 70 percent leased and generates around $10.9 million in annual rent, according to Alex Cooper Auctioneers.. Notable tenants include the National Association of Attorneys General, Freedom House and the American Academy of Actuaries

Renovations done in 2020 included an upgraded lobby, according to the property’s VTS property page

Officials at JPMorgan Chase and Manulife did not immediately return requests for comment.

The nation’s capital, like other large urban centers, has faced distress with older office properties of late due to increasing hybrid working trends spurred by the COVID-19 pandemic. Another D.C. office property at 4400 Jenifer Street NW owned by Zuckerman Gravely went 30 days delinquent last November on a $26.2 million commercial mortgage-backed securities loan originated by Natixis in 2016. 

Andrew Coen can be reached at acoen@commercialobserver.com