D.C. Office Owned by Brazilian Billionaire Sent to Special Servicing
By Nick Trombola July 23, 2024 5:24 pm
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Another office in Downtown Washington, D.C., has fallen victim to the city’s rampant level of distress.
A loan tied to an eight-story building at 2025 M Street NW was transferred to special servicing after the owner — an enterprise of Brazilian retail mogul Michael Klein — missed its July payment.
The owner owes $56.4 million on a $63.5 million acquisition loan originated in 2015 by RAIT Financial Trust, later sold as a J.P. Morgan Chase-created commercial mortgage-backed securities trust, according to Bisnow, citing Morningstar data. The loan matures in April 2025.
Klein paid $106 million for the roughly 191,000-square-foot property about a mile northwest of the White House. The property was 99.5 percent leased at the time, though occupancy has since fallen to 59 percent by the end of the first quarter of this year, per Bisnow.
Radio Free Asia is one of the remaining tenants, taking 89,000 square feet, per Bisnow, citing Morningstar.
An attorney for Klein’s enterprise did not immediately respond to a request for comment.
Office distress in the nation’s capital has effectively become the new normal in the wake of record vacancy rates and high interest rates.
State Farm Insurance last month, for example, acquired a 10-story office building in the District at a foreclosure sale for the bargain price of $17.6 million, 73 percent less than the previous owner paid for the building in 2010. Or there’s the 135,000-square-foot office known as the Portrait Building that was handed back to lender Voya Investment Management in May in lieu of foreclosure.
Even when office buildings not in distress sell in D.C., it’s not necessarily great news. Tishman Speyer last week sold 2000 K Street NW to Spear Street Capital for $140.2 million despite completing a heavy $65 million renovation five years ago.
Nick Trombola can be reached at NTrombola@commercialobserver.com.
