Suburban D.C. Office Properties Sell Out Of Mexican Fund's Liquidation
A Mexico City-based private equity fund that filed for Chapter 11 bankruptcy last year sold two D.C.-area assets at the end of its liquidation process this summer.
Aztec Fund Holding auctioned off three office assets this summer, one in Prince George’s County, another in Alexandria and a third in Alpharetta, Georgia, according to records filed in the fund’s Chapter 11 process with the Bankruptcy Court for the Southern District of Texas.
The proceeds were used to pay Bank of America, the fund’s secured creditor, which was owed $115.7M as of last October, according to court records.
The properties were sold at steep discounts to what affiliates of Aztec, a fund run by Charles Haddad of Mexican real estate and civil engineering giant Grupo Haddad, paid to acquire them.
In Prince George’s County, the fund offloaded Bowie Corporate Center at 4321 Collington Road for $9.6M, according to court filings and Maryland property records.
Aztec purchased the 126K SF suburban office building for $24.8M in February 2021. At the time, the sale represented the highest price achieved in a decade for a suburban office building in the county. Its value was appraised last October at $20.1M, according to court filings.
The office building is 95% leased to healthcare software company Inovalon through June 2029. The buyer was Long Island-based Namdar Realty Group, a company that has made a business out of buying up dying shopping malls and has pivoted to distressed office hunting.
Aztec offloaded Mark Center, a 240K SF office building at 2001 N. Beauregard St. in Alexandria, to an affiliate of its sole tenant, national security contractor Systems Planning & Analysis, for $29.3M, according to court records.
Aztec paid $71.7M for the building in February 2021. Court records indicate that it was appraised last October at $64.6M.
Haddad, Namdar and the attorneys for Systems Planning & Analysis didn't respond to requests for comment. Bank of America and its attorneys declined to comment.
Bank of America had issued Aztec a loan in January 2021 for $202M, which was eventually backed by nine properties, including the three sold this summer. Haddad, president of the debtors in Aztec Fund Holding, wrote in the initial Chapter 11 filing that the fund invested $80M of equity into the buildings, which combined span nearly 700K SF.
Bank of America had foreclosed on five of those properties, all in Texas, in May 2024. Those garnered between 23% and 70% of their original appraised values, according to court documents.
“The Debtors reluctantly allowed [Bank of America] to complete the foreclosures because the subject properties were among the most distressed — in terms of occupancy, capital improvement and tenant improvement requirements approximating $30 million under the market conditions — in the portfolio,” Haddad wrote.
The lender was planning to foreclose on the remaining four office properties that summer and fall, but Aztec filed a bankruptcy petition in August 2024, halting that process.
Haddad wrote that the pandemic's impact on office demand, the loan’s floating interest rate and declining tenancy at the properties were hampering their profitability and ability to stabilize.
Filings from Bank of America in October say the portfolio’s property values severely declined after the loan was executed in January 2021, even after it had extended a period of forbearance.
“For almost two years, the Debtors and their equity holders had been either unwilling or unable to address the maturity of [the loan] or provide adequate capital to maintain the value of the nine commercial office buildings securing the Loan,” the filings say.
