CBRE Arranges Acquisition Financing for DC Office Property

By Barbra Murray, Contributing Editor 

Charles Foschini, CBRE

It’s not just the premier office buildings that are getting financing these days. CBRE Capital Markets’ Debt & Structured Finance team has just arranged a $63.6 million loan for Brazil-based private family interest’s acquisition of 2025 M St., a Class B office building featuring 195,600 square feet in Washington, D.C.

Ownership of 2025 M changed hands in a $109 million deal this quarter, and CBRE secured the acquisition financing–a 10-year loan with an aggressive rate and three years interest only–from RAIT Financial Trust.

Charles Foschini, vice chairman of South Florida markets with CBRE, told Commercial Property Executive that RAIT and other lenders were attracted to 2025 M’s “strong Tier 1 market location in Washington D.C., the strength and quality of the borrower and a low loan basis relative to land value in the D.C. market.”

And 2025 M’s tenancy couldn’t have hurt. The building is 98 percent occupied and it has enviably maintained an average lease rate of 97 percent over the last 10 years, according to CBRE’s executive summary of the property.

Offers rolled in despite the fact that 2025 M, although described by CBRE as a “magnificent property”–doesn’t precisely fit the typical mold of a lender’s dream opportunity. In addition to being a notch below premier status, the asset, which was developed in 1971 and renovated in 1995, required the reconciliation of the property’s land value; the future development rights above the existing improvements; the current income stream; and a tenant roster that has its share of occupants that rely on government allocations. Yet, lender interest in providing financing for 2025 M ultimately resulted in a competitive process.