RMR and AEW’s Downtown D.C. Office Slated for Foreclosure
By Anna Staropoli May 31, 2024 1:31 pm
reprints
More distressed D.C. office space is set to be auctioned off.
Joint-venture owners Office Properties Income Trust (OPI) — managed by The RMR Group — and AEW defaulted on their mortgage at 1750 H Street NW. The 123,000-square-foot, 10-story office building is now set for sale at a foreclosure auction, Business Journals first reported. According to the foreclosure notice, $32.7 million provided by lender State Farm is outstanding.
“[The] joint venture did not have sufficient cash flow to pay its monthly debt service,” OPI stated in its first-quarter earnings report, per Business Journals. “We expect the nonrecourse mortgage lender to this joint venture to take full possession of the property in the second quarter.”
In a 2023 SEC filing, OPI added that its partner was in default of their agreement, after failing to fund a $600,000 capital call. SEC filings also listed an impairment loss of $19.2 million. As outlined in the foreclosure notice, the foreclosure auction and sale of the 10-story building will occur on June 20 through Alex Cooper Auctioneers.
AEW and First Potomac Realty Trust — which was later acquired and rebranded as OPI — have owned the building since 2010, when they purchased it in a $65 million joint venture. In recent years, the owners revamped the building with upgraded amenities in an attempt to draw tenants. In 2022, World Food Program USA signed a lease for a 13,277-square-foot headquarters in the building.
Earlier this spring, State Farm filed a complaint, stating that the borrower failed to provide its monthly interest payment of more than $104,000 for three months. The insurance company then served the borrower with a default notice.
On May 22, a D.C. Superior Court judge gave Transwestern immediate possession of the building, Business Journals reported.
Spokespeople for RMR, OPI and AEW did not immediately respond to requests for comment.
Anna Staropoli can be reached at astaropoli@commercialobserver.com.
