Trophy Office Building in DC Headed to Foreclosure Auction

Another day, another foreclosure auction scheduled for a Washington, D.C., office building.

The 405,000-square-foot trophy office property at 1625 Eye Street NW is set to be auctioned in a public sale on June 16, Bisnow reported. A notice regarding the sale was filed in the D.C. Recorder of Deeds.

The auction was scheduled quickly after lenders ING Capital and German bank Münchener Hypothekenbank eG filed a foreclosure notice and affidavit before the weekend, alleging the landlords — American Real Estate Partners and Westbrook Partners — defaulted on $190.9 million in debt.

AREP declined to comment to the publication, while the other involved parties did not respond. The foreclosure sale can still be averted if the lenders and landlords reach an agreement in the next few weeks.

AREP and Westbrook took out an acquisition loan when purchasing the property in 2019 for $259 million. They spent $5 million renovating the building, which is located just a block from the White House.

The anchor tenant, O’Melveny & Myers, occupies 99,000 square feet on a lease scheduled to expire in three years. Other prominent tenants include the National Fish and Wildlife Foundation (65,000 square feet) and Simpson Gumpertz & Heger (21,000 square feet), both on leases expiring in 2029.

The property has 92,000 square feet available, according to CoStar data, in line with a market office vacancy rate stuck above 20 percent. The struggles of the office market have forced several landlords into foreclosure, then to the auction block.

A large portion of L’Enfant Plaza was put up for auction after JBG Smith Properties wrote off the complex in 2023, when the outstanding loan balance was $238 million. Blackstone Mortgage Trust, the lender, won the auction for a mere $83.7 million, not even a quarter of the property’s most recent valuation, according to the Washington Business Journal.

Other examples in the market include Starwood Property Trust foreclosing on Brookfield and a Goldman Sachs venture foreclosing on Columbia Property Trust.

— Holden Walter-Warner