Re-printed from the April 23, 2010 Commercial Mortgage Alert
Investcorp is shopping a performing $100 million senior mortgage that it acquired last summer from Citigroup. The loan is backed by a 609,000-square-foot office building in Washington that is leased to the U.S. Coast Guard until May 2018.
Eastdil Secured is advising Bahrain-based Investcorp, whose real estate arm is based in New York. Bids are due in early May.
The building, at 2100 Second Street SW, is owned by a partnership between AREA Property Advisors and Monday Properties, both of New York. The duo bought the property for $169 million in December 2006, investing $38 million of equity and lining up a $135 million debt package from Citi, including a $35 million mezzanine loan.
The interest-only senior loan, which matures in January 2004, has a 5.7% fixed rate. The building is currently throwing off some $15 million of net operating income, good for a debtservice- coverage ratio of 2.7 to 1, according to materials viewed by investors. The in-place debt yield — net operating income as a percentage of the loan amount — is a healthy 15.7%.
Citi planned to securitize the senior mortgage, but was unable to do so when the securitization market seized up. It sold the mezzanine loan in the past month to a partnership that includes T-Rex Capital of Boca Raton, Fla.
The Coast Guard has been the sole tenant at the eight-story building since it was constructed in 1973. But, as part of a consolidation of offices by the U.S. Department of Homeland Security, the Coast Guard plans to move to a new headquarters in the second half of 2013, leaving it unclear if the U.S. government will renew the lease. The building, which is along the Anacostia River, includes a small street-level retail component.