Bank of America is securitizing a new commercial mortgage for the International Square office complex in Washington, D.C., featuring The Federal Reserve and The World Bank as prime tenants.
BAMLL Commercial Mortgage Securities Trust 2016-ISQR is issuing notes backed by a $370 million slice of a 10-year, $450 million whole mortgage loan structure secured by the 1.16 million square-foot, three-tower office campus, according to Standard & Poor’s.
The massive Class A office space spans a full square block area of in D.C.’s central business district, bordered between 18th and 19th Street NW along the K Street corridor, stretching south to I Street.
S&P and Morningstar assigned preliminary ratings to the five-note capital stack, incuding an ‘AAA’ rating to the $166.7 million Class A tranche.
The new International Square mortgage, carrying a rate of 3.615%, refinances $375.4 million of existing mortgage debt and includes a $41.3 million equity redemption for the property owners, International Square L.P., according to S&P. BofA is retaining $80 million of the notes.
The largest tenants include The Federal Reserve Board of Governors (390,233 square feet), law firm Blank Rome (167,863 square feet) and The World Bank (99,447 square feet). The Federal Reserve occupies the second floor across all three office towers, and recently renewed through 2028 with 103,000 square feet of additional leased space.
International Square is among the largest commercial office buildings in D.C., and has averaged 96% occupancy since its first-phase development starting in 1978 (the complex was completed in 1982). S&P notes International Square is not competitive with “newer trophy quality Class A space,” but International Square L.P. has poured $9.7 million in capital improvements into the property since acquiring it in 2006.
The complexes’ other tenants includes law firms such as Milbank, Tweed, Hadley & McCloy, public affairs agency Edelman and Morgan Stanley.
The mortgage loan is an interest-only loan that does not amortize, S&P notes, and has a balance with a debt service coverage of 2.18x.
