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January 24, 2020  

Banks to Lend $1.2 Billion on Virginia Offices

Deutsche Bank, Goldman Sachs and J.P. Morgan have agreed to provide $1.2 billion of floating-rate debt to refinance an office portfolio in Northern Virginia.

The nine Class-A buildings, totaling 2.5 million square feet, are in Rosslyn, Va., just across the Potomac River from Washington. They are owned by a joint venture between Goldman’s U.S. Real Estate Opportunities 1 fund and Monday Properties of New York.

Eastdil Secured is brokering the loan, which has an initial term of two years and three one-year extension options.

Deutsche will fund half of the financing package, which includes a roughly $200 million future-funding component. Goldman will take down 30% and J.P. Morgan will assume 20%. The banks plan to securitize about $1 billion of the debt via a stand-alone commercial MBS offering.

The portfolio includes a two-tower complex, totaling 1 million sf, at 1000-1100 Wilson Boulevard, and a 330,000-sf building at 1101 Wilson Boulevard. The other properties are at 1200, 1401, 1501 and 1515 Wilson Boulevard, 1400 Key Boulevard and 1701 North Fort Myer Drive.

Monday Properties partnered with Lehman Brothers in 2007 to buy the portfolio from Broadway Real Estate of New York for $1.3 billion. The Goldman fund purchased Lehman’s 89% stake in 2011.

Proceeds from the new loan will be used to retire three floating-rate mortgages that were originated in 2017. Blackstone and Goldman’s real estate finance unit teamed up to originate $725.6 million of debt on seven of the buildings, totaling 2 million sf. The $500 million senior loan was securitized in a single-borrower transaction (RPT 2017-ROSS). The rest was structured as mezzanine debt.

The other two properties in the portfolio were financed by Blackstone with separate loans totaling $135.9 million — portions of which were funneled into the collateral pool for a $1 billion commercial real estate CLO (BXMT 2017-FL1).

The seven properties in the RPT transaction were 67% occupied as of Sept. 30, according to a CMBS servicer report. The net operating income from those properties was $33.8 million for the first nine months of 2019. That indicates the full-year total easily topped the $36.3 million of net operating income the buildings generated in 2018.