fundamentals are like catnip to
WASHINGTON, DC-News of the $64-million refinancing of the Liberty Building, a deal that occurred earlier this year, has come and gone except for one tidbit: who exactly provided the debt. Prudential Mortgage Capital Co. revealed this week that it did. The 12-year, fixed-rate loan, secured by Cassidy Turley, was provided to an entity controlled by Liberty Washington, LP, a joint venture between an institutional investor and Philadelphia-based Liberty Property Trust.
A 10-story building located at 1129 20th St., NW, the 176,059-square-foot, LEED Gold-certified office is like catnip to a life company. It is core, 96% leased and recently renovated by its owner.
It is also indicative of the appetite life companies traditionally have had for the DC area, particularly the District. Even now, with leasing lackluster, life companies have not been dissuaded from lending, especially to core assets such as the Liberty Building.
“All of the major and not-so-major life companies consider DC to be one of the top if not the top place to be,” Cassidy Turley’s Phil Mudd tells GlobeSt.com. Now the life companies are, as they do every year, formulating their allocations for 2013. Normally the District would have little worries, but this has turned out to be a special year with a squeaker of an upcoming election and a looming fiscal cliff to factor in.
“I don’t know of any investor that is completely confident about their projections for 2013,” Jones Lang LaSalle’s Jim Molloy tells GlobeSt.com. “There’s a lot of uncertainty.”
So far, however, life companies seem to be staying the course with their appetite for the DC market. “DC has always been a key market for us, and it will be in the future,” Justin Levitt, a director with Prudential Mortgage Capital Co.’s New York City office who led the Liberty Building transaction, tells GlobeSt.com. “We want to focus on key gateway cities, especially for office, and that’s the main reason we did the Liberty deal. That and it has a great sponsor.” Levitt says Pru’s 2013 allocations for DC will be similar to 2012 and possibly higher. “We’re looking to do more deals in the DC MSA.”
Mudd, as well, has heard that life companies will be holding firm or raising allocations for DC next year. “DC is still very strong,” he says, “and the life companies like seasoned properties that are low leveraged. That’s what we have.”
Even Molloy, who has seen other investor groups hesitate due to the political and global economic climate, is sanguine about life’s ongoing appetite for the District and surrounding areas. “The historic stability of DC is very appealing to the life investor,” he says.