Downtown DC Loan Sale Latest Sign of Market’s Struggles

The latest bump in Washington, D.C.’s downtown office market is unfolding right near the Capital One Arena.

The subperforming $140 million loan backing 700 Sixth Street NW is up for sale, Bisnow reported. The marketing materials being distributed by JLL don’t specify what property the loan is attached to, but the details match up with the property owned by Affinius Capital and Principal Real Estate Investors.

None of the trio of companies responded to a request for comment from the publication.

The loan backing the 306,000-square-foot property is set to mature in two months. It carries a 3.7 percent interest rate and is being marketed with a “path to ownership.”

There are two anchor tenants in place at the building, which is 79 percent leased with a weighted average lease term of 7.8 years. Tenants include Monumental Sports Network and law firm Eversheds Sutherland.

Akridge developed the 12-story building in 2009 and sold it to Affinius predecessor USAA Real Estate two years later. In 2019, ownership refinanced the property with the $140 million loan now nearing maturity.

That looming maturity could signal the latest distress sale — or at least distressing moment — for the D.C. office market. At the beginning of the year, WC Smith offloaded its own headquarters at 1100 New Jersey Avenue SE to an affiliate of Onward Investors for $43 million. The sale price is less than one-third of the property’s last assessed value of $132 million and was described as a short sale.

The doldrums have allowed opportunistic buyers to enter the market. Matthew Jemal, the 38-year-old heir of Douglas Development, has become one of D.C.’s most aggressive office buyers, snapped up nearly 600,000 square feet across four distressed urban office properties for $89.3 million at steep discounts in the past ten months.

— Holden Walter-Warner