By Dana Hedgpeth
Washington Post Staff Writer
Wednesday, August 19, 2009
A partnership that owns a large portfolio of Washington area office buildings is not meeting certain provisions of the debt agreement on the properties and is in talks to restructure the loan, according to a source familiar with the negotiations.
The partnership is led by Tishman Speyer Properties, a New York-based commercial real estate company. Tishman and its partners paid $2.8 billion in late 2006 to acquire the portfolio of roughly 20 buildings from the Blackstone Group, a New York private-equity firm.
Tishman struck the deal when there was plenty of easy credit. Like many other real estate investors at the time, Tishman put a large amount of debt on the properties, according to the source, who spoke on the condition of anonymity because he was not authorized to speak publicly on the matter.
As the commercial real estate market has crumbled, with rising office vacancies and falling rents, many investors are finding that they overpaid for properties and are now having to pay off and refinance the loans. Tishman, the source said, has violated certain debt covenants with its lenders.
Rick Matthews, a Tishman spokesman, said: "We have confidence in the long-term value of the portfolio. We are working with our lenders to achieve a reasonable resolution to the current situation."
In May, Standard & Poor's lowered its credit rating on Tishman's Washington portfolio, citing "declining asset values and slower than anticipated leasing progress."
The properties in question were once owned by CarrAmerica, a District-based developer that was purchased by the Blackstone Group in July 2006 for $5.6 billion. Blackstone sold the Washington portfolio to Tishman months later.
CarrAmerica came out of the company originally founded by Oliver T. Carr Jr., once one of the best-known developers in the District. His firm built several large office buildings along Pennsylvania Avenue NW and refurbished the landmark Willard Hotel. Other projects included 1800 M Street NW; the mammoth International Square in the 1800 block of I Street NW; and Terrell Place at Seventh and E streets NW, near the Verizon Center.
Tishman Speyer also owns New York's Rockefeller Center and the Chrysler Building.
The Wall Street Journal reported Tishman's difficulties with its Washington properties on its Web site Tuesday night.