10/22/2010

MetLife Backs Beacon Deal for DC Complex

MetLife has originated a $160 million fixed-rate mortgage for a Beacon Capital partnership that acquired an office complex in Washington last month.

The five-year loan is backed by the 398,000-square-foot Terrell Place complex, in the East End submarket.

Beacon, a Boston fund shop, teamed up with GE Pension Trust to buy the property from Tishman Speyer of New York for about $265 million. The duo tapped a credit facility to finance the purchase and then lined up the loan from MetLife to pay down the line.

MetLife competed with a bevy of other insurers, banks and foreign lenders for the Terrell Place assignment. Cassidy Turley arranged the mortgage, which has a loan-to-value ratio of 60%.

While MetLife and other insurers have been actively originating loans on high-end office and retail properties this year, most have involved refinancings. The Terrell Place loan is one of the few that have financed acquisitions. But the sales market has started to perk up in recent months, which should provide additional opportunities for lenders.

Terrell Place is 99% occupied. The lead tenant, law firm Venable, leases 269,000 sf as its headquarters.

The three-building property, with entrances at 575 Seventh Street NW and 650 F Street NW, is across from the Verizon Center office building and about 10 blocks east of the White House.

The site was formerly occupied by a Hecht's department store, which was constructed in 1924. In 2003, a client of J.P. Morgan, acting in partnership with CarrAmerica, completed a $150 million redevelopment. In 2006, a Blackstone fund inherited CarrAmerica's 30% stake when it bought the Washington REIT. Blackstone included the stake in a $2.4 billion portfolio that it sold later that year to a Tishman partnership. New York-based Tishman later took full ownership of Terrell Place.

In 2008, Tishman obtained a $180 million mortgage on the complex from Eurohypo and Landesbank Baden-Wurttemberg (LBBW). The banks funded equal portions of the three-year floater.

The complex includes three levels of underground parking, an 11-story glass atrium, a roof deck and a fitness center.

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