Olney, MD, US, Americas

$17.3 Million Non-Performing Medical Office Loan

Portfolio description

Jones Lang LaSalle (“JLL”) has been retained on an exclusive basis by the Seller to arrange the sale of a $17.3 million non-performing mortgage loan (the “Loan”). The Loan is secured by a first-priority lien on the leasehold deed of trust in two medical office buildings located in Olney, a suburb north of Washington, D.C. (the “Property”). As of December 2023, the Property is 72.2% occupied with a WALT of 2.9 years.

The Loan was originated in December 2014 to refinance the existing debt of the Property and requires monthly interest and principal payments of $104,541. The ten-year Loan is structured with a fixed interest rate of 4.35% and matures in December 2024. As of January 1, 2024, the Loan is past due and has an unpaid principal balance of $17,251,891.

The Property is a leasehold interest pursuant to two ground leases (the “Lease”). Originated in January 1999, the two Leases require annual rent payments of $278,320 which is subject to a 25% rent increase every five years for the duration of the term. With an initial maturity date in January 2049, the Lease features an option to extend the term by an additional 20 years, bringing the final maturity date to December 2069.

The offering presents investors with the ability to acquire a non-performing loan with significant value-add upside at an attractive basis.

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Attributes

Building area gross

127,868 sf

Land area gross

6 acres

Occupancy

72%

Current interest rate

4.35%

$17.3 Million Non-Performing Medical Office Loan (2 Properties)

Investment Highlights

Potential Immediate Path to Ownership

Currently non-performing, there are active discussions with the seller to get a Deed-in-Lieu from the current Sponsor

High Credit of the Tenant Base

The properties benefit from stable cash flow generated by low-risk tenants such as one major tenant that is rated A2 by Moodys

Well-Located

Situated on a leading medical center campus, the Properties are well-located in the biotechnology hub of the Mid-Atlantic with close proximity to an affluent and aging population

Value-Add Opportunity

With a current occupancy level of 72%, investors are provided a significant value-add opportunity through the continued leasing of vacant space and through the execution of the Lease extension