$150M COPT Office Portfolio Loan Becomes Delinquent for First Time

Photo: ruppertlandscape.com

The $150 million COPT Office Portfolio loan, which is backed by two office properties in Chantilly, VA, has been transferred to a special servicer after becoming delinquent for the first time last month, according to data provided by Trepp.

The two buildings, Washington Technology Park I and II, total 694,016 square feet.

At securitization, the 10-year fixed rate loan secured by the two suburban office buildings was interest only for the entire loan term, with a maturity scheduled for June 1, 2017. The annual interest rate was listed at 5.65 percent.

Speaking on the company’s first quarter conference call with analysts, Steve Riffee, Executive Vice President and Chief Financial Officer at Corporate Office Properties Trust (COPT) (NYSE: OFC), said the cash flows from the properties due to tenant departures were no longer sufficient to the service the debt.

“We do have a technical default, which should trigger the master servicer to transfer (the loan) to the special servicer,” said Riffee. “We will again try to negotiate a good economic solution for all parties, but it’s likely and our guidance assumptions assumes that ultimately we will end up conveying those properties.”

CSC Information Systems, which had paid a blended rental rate of $22.70 per square foot to occupy as much as 302,645 square feet in Washington Technology Park I, now occupies 19,625 square feet in the building through a new one-year lease.

As previously reported, Northrop Grumman paid a $4.7 million lease termination fee to exercise an early lease termination and vacate its space at Technology Park II. The company occupied 65 percent of the building, and paid a rental rate per square foot of $31.11 at the time of securitization.

Washington Technology Park I (WTP I), which contains a total of 470,406 square feet on 34.89 acres, was built in 1989. It includes a five-story, Class “A” 427,196 square foot building and a two-story, 43,210 square foot building known as The Commons. The building has a five-story atrium lobby and 1,600 surface parking spaces.

Washington Technology Park II (WTP II), a six-story Class “A” building containing 223,610 square feet, was built on 17.02 acres in 2005. It has 895 surface parking spaces and is adjacent to both The Commons and WTP I.

The Commons is a combination of office space and amenities, including a health & fitness center, an auditorium, conference room, and a full-service cafeteria. The Commons amenities are shared with both WTP I and WTP II via an underground walkway.

The properties are located in the Westfields Corporate Center, an 1,100 acre office park developed in the 1980’s that includes a colonial style conference center with 48,000 square feet of meeting space, a golf course and athletic fields. Located just south of the Washington-Dulles International Airport, the property is about one-half mile south of the US Route 50 and Route 28 interchange and about one mile north of the I-66 and Route 28 interchange.