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A 1980s-era Northwest D.C. building has become the latest office asset to be handed over to its lender as the sector faces record vacancy and rising distress.
But the new owner, global investment giant KKR, believes it can revive the office asset by putting more money into it.
An affiliate of Barings relinquished control of the Chevy Chase Plaza office building at 5301 Wisconsin Ave. NW to a subsidiary of KKR through a deed-in-lieu-of-foreclosure transaction, which was posted in public records Wednesday.
"Our intention is to position Chevy Chase Plaza for success and we will invest capital to benefit existing tenants and attract high quality new ones," a KKR spokesperson said in an emailed statement to Bisnow.
Barings was on the hook for a $35M loan on the property that was originally issued in 2006 to Cornerstone Real Estate Advisors. Cornerstone rebranded as Barings in 2016.
Hartford Investment Management first issued the loan, but it changed hands multiple times over that span and was most recently held by Commonwealth Annuity and Life Insurance Co., a subsidiary of Global Atlantic Financial Group, which KKR acquired in November.
Deed records aren't clear on when the property last sold or for how much. But D.C. property assessments show a precipitous decline in value, from $81.8M in 2020 to $79.6M in 2021, $66.5M in 2022 to $57.2M last year and $56.7M this year. Its proposed assessment for next year would fall again to $54.5M.
The eight-story, 171K SF office building was constructed in 1988. It sits a block from the D.C.-Maryland border in Friendship Heights, next to the Red Line Metro stop and surrounded by retail.
The building has 86K SF of available space across six floors, according to the Transwestern page marketing the asset.
Transwestern sent an email to the brokerage community Wednesday with the subject line "Exciting Update: New Ownership Ushers in a New Era at Chevy Chase Plaza."
"Leveraging KKR's strong financial resources, Chevy Chase Plazas offers premier office space at unmatched value," the email says. "With the financial capacity to enhance the property and to move swiftly, we're ready to deliver competitive deals."
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