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January 27, 2017  

Walton Street, KeyBank Arrange Big DC Loan

A group of South Korean investors has provided $204 million of debt financing on the Woodies Building complex in Washington.

The fixed-rate loan was arranged for the investors by a program operated by Walton Street Capital and KeyBank. Douglas Development used most of the proceeds to refinance the $160.5 million outstanding balance of debt on the 498,000-square-foot office and retail property, in the East End submarket. The leverage ratio is 65%, putting the complex’s value at about $315 million.

Under their program, Chicago-based Walton Street and KeyBank line up commercial-mortgage investments for separate-account clients of Walton Street. Including the Woodies Building mortgage, the duo has now arranged five loans totaling about $630 million. Key services the loans.

Eastdil Secured represented Washington-based Douglas on the Woodies Building loan, which has a 12-year term and closed a week ago. The property encompasses two buildings with about 405,000 sf of offices and 93,000 sf of retail space. The bulk of the space is in the larger building, at 1025 F Street NW, which was constructed in 1887. It formerly housed a department store operated by the Woodward & Lothrop — or Woodies — chain. By 1926, after being expanded several times, that building occupied most of the block bounded by 10th, 11th, F and G Streets. The other building is a small townhouse, at 1001 F Street NW, that houses a Madame Tussaud’s wax museum.

Douglas bought the complex out of bankruptcy in 1999, after the previous owner, the Washington Opera, was unable to redevelop it. Douglas then spent $100 million repositioning the main building as offices, with street-level retail space.

The property, roughly midway between the White House and the Verizon Center arena, is nearly fully leased. The tenants include the FBI (145,000 sf until 2025), the National Endowment for Democracy (66,000 sf until 2021) and Forever 21 (65,000 sf until 2020).

In 2007, Douglas lined up a $172.1 million fixed-rate loan from CWCapital, which securitized it via a $2.4 billion pooled deal (CWCI 2007-C2). That loan, which had a 5.9% coupon, was set to mature in March.