A prominent D.C. office landlord didn’t pay back the $450M loan backing a massive 1980s-era office complex by its maturity date.

Tishman Speyer's loan on the 1.2M SF International Square office complex matured on Aug. 10, according to special servicer commentary recorded in Morningstar Credit’s database. The trio of interconnected office buildings spans an entire square block next to the Farragut West Metro station.

International Square’s occupancy has plummeted since the CMBS loans were issued in 2016. Earlier this year, its largest tenant, the Federal Reserve, said it would move out of more than half of its space.

The $166.7M of Class A shares and Class A bonds were rated AAA when the loan was securitized in 2016. Now they are rated BB, indicating a far higher risk profile.

“We are currently working with our lenders to identify a mutually beneficial path forward for International Square,” a Tishman spokesperson told Bisnow in an email. “As those discussions proceed, we will continue to provide our customers with the same world-class building operations and services they have come to expect from us.”

The landlord added that it is “exceptionally proud” of its office portfolio and International Square, which it called “an outlier” that is “not representative of [its] broader office platform.”

Its special servicer, Torchlight Loan Services, didn’t respond to a request for comment. 

The property went into special servicing in May, after the Federal Reserve Board issued a termination notice “for the various suites expiring in 2029,” according to special servicer commentary. The Fed has multiple leases at the property that expire at different times.

A 204K SF piece, which accounts for 17.6% of International Square's leasable area, expires in 2029. A 99K SF portion expires in 2028, and a 68K SF piece expires in 2033, according to Morningstar.

“The Federal Reserve’s termination notice is the real story here — there was already just about no chance of this loan getting refinanced even before that happened,” Morningstar Associate Managing Director David Putro said in an email to Bisnow.

Putro added that while the borrowers will likely engage in “workout discussions,” D.C. remains a challenging office market, and “given the size of the building, it will take several hundred thousand square feet of leasing to get it stabilized.”

The property was 70% occupied as of last September, according to a June S&P Global report. That is down from 94% occupancy in 2016, according to S&P's presale report. Blank Rome’s 168K SF lease expires in 2029.

S&P Global said in June that the complex has had “minimal new leasing activity” due to elevated vacancy rates for certain four- and five-star properties in the D.C. office market.

“We believe the property's performance is not likely to improve to historical levels in the near term without significant capital investments,” S&P said.

International Square's ground floor houses a 25K SF food hall, which opened exactly three years ago.

Last month, Tishman sold its office building directly across the street at 900 19th St. NW. PRP Real Assets picked up the 117K SF property, which is roughly 60% vacant, for $30M.