A major developer in Greater Washington, D.C., has defaulted on a $161 million loan balance connected to several of its local suburban office assets, the Washington Business Journal reported. The mortgage, partially backed by seven Brookfield Properties-owned Class B office buildings, the majority in Rockville, was transferred to a special servicer on March 14. The transferwas “due to monetary default,” according to a recent loan servicer report. Bloomberg first reported the default. The default pertains to mortgage debt secured originally by 14 properties, including 11 in suburban Maryland and Northern Virginia that Brookfield acquired in 2016 and 2017. The others were in Florida and Georgia. Brookfield refinanced the portfolio in 2018, carrying an initial balance of $223 million, and then subsequently sold several of the properties, including four in the D.C. area, using proceeds to bring the portfolio's mortgage balance to $161 million as of this month. Brookfield's remaining seven properties in suburban Greater Washington, acquired in aggregate for nearly $263 million, represent more than 1.1 million square feet of ’70s- and ’80s-era office space. Five buildings are in Rockville, one in Silver Spring and one in Arlington. The special servicer, KeyBank National Association, “is working with the Borrower to execute a Pre-Negotiation Agreement and to determine the path forward,” per loan servicer notes. The original loan balance, originated by Morgan Stanley Mortgage Capital Holding, was $223.4 million, but was reduced due to three unscheduled payments that line up with the four building sales — one for $8.17 million in July 2020, one for $34.5 million in January 2022 and one for $19.3 million in October 2022.
