Finance  ·  CMBS

Watergate Office Building’s CMBS Loan Falls Delinquent

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The infamous Watergate Office Building —known for a 1972 burglary leading to the eventual resignation of President Richard Nixon — is staring at a new downfall heading into 2024 after losing a key publishing tenant that ironically occupied space where the historic crime occurred. 

The $73 million commercial mortgage-backed securities (CMBS) loan tied to the 215,520-square-foot office complex in Washington, D.C.’s Foggy Bottom neighborhood has fallen delinquent, according to a Morningstar report released Friday morning. 

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The Watergate building — which once housed the headquarters of the Democratic National Committee on the sixth floor burglarized in an act later revealed to be ordered by the Nixon administration — saw its leasing occupancy drop from 100 percent at the end of last year to 78 percent as of September, Morningstar data shows. 

The property at 2600 Virginia Avenue NW saw the departure last year of anchor tenant Sage Publications, which also occupied the sixth floor, in October 2022 when its lease expired. 

The  loan tied to the Watergate Building comprises five percent of the BMARK 2019-B14 conduit deal. Recent servicer commentary showed October and November debt service payments were outstanding. A lockbox was activated in September 2023 due to failure to meet a required 6.25 percent debt yield hurdle, according to Morningstar. 

The struggles of the building come just over four years after Friedman Capital purchased the 11-story office tower from Rockwood Capital for $102 million in September 2019 just six months before the onset of the COVID-19 pandemic.

Officials at Friedman Capital did not immediately return a request for comment.

Andrew Coen can be reached at acoen@copmmercialobservr.com