To be sure, this loan is hardly that frightening, unlike, say a construction finance transaction. The class A 840 First St. is fully leased to an investment grade tenant--CareFirst. The lender is an overseas financier.
That said, the property is located in a submarket that is overbuilt and increasingly, under occupied, Cassidy & Pinkard Colliers David Webb tells GlobeSt.com. Webb, along with Jamie Butler, arranged the financing.
The dynamics of the mezz market have not changed that dramatically in the last six months, Webb says. "We still have a large number of lenders looking to place mezz debt in one of two categories: low- to mid-teens returns looking for a relatively safe investment and 18% to 20% range looking for accrual returns, based on higher risk."
Still, though, given the dynamics of the capital markets, the mezz players have been keeping risk exposure to the minimum, which makes this transaction a possibly telling one, Webb says.
"When a deal gets done in a market like NoMa--where there is a lot of concern about oversupply and vacancy--it shows that at least some lenders are willing to take on more risk."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
