Donohoe averts foreclosure of former Fannie Mae site, offers plan to redevelop it
WASHINGTON BUSINESS JOURNAL · DANIEL J. SERNOVITZ — 2019-07-25
The Donohoe Cos. struck a deal Wednesday to head off the potential foreclosure of a Tenleytown office building formerly occupied by Fannie Mae, setting the stage for the property’s redevelopment into a mixed-use project with residential and retail.
Donohoe President and CEO Chris Bruch, in a phone interview, said the company has negotiated to acquire the debt on 4000 Wisconsin Ave. NW and proceed with the development plans the company submitted in 2017, prior to the departure of Fannie Mae as its anchor tenant. Bruch declined to disclose terms of the deal.
As the project's lead developer, Donohoe is teaming up once again with D.C.-based Holladay Corp. as its investment partner. The two jointly developed the office and retail project at the corner of Wisconsin Avenue and Upton Street NW, completed in 1986.
Documents filed Wednesday with the D.C. Recorder of Deeds indicate the debt on the property has been assigned to affiliates of Donohoe and Holladay President Wallace Holladay Jr.
The roughly 800,000-square-foot project, to be called Upton Place, is slated to include about 690 multifamily units and 100,000 square feet of retail. Donohoe has retained Eastdil Secured to help it line up financing for the development, designed by SK&I Architecture, with the hope of breaking ground early next year. Donohoe will handle leasing in house for the property's retail space.
"I'm pleased that we have successfully negotiated the purchase of the debt, and that will allow us to proceed with the development of Upton Place," Bruch said.
Donohoe was served with foreclosure notices twice this year, first in February and again earlier this month. The first foreclosure auction was canceled, and the second was slated for early August. An affiliate of the Bethesda-based firm had an outstanding balance of about $57.7 million on the roughly 491,311-square-foot building, according to the D.C. Recorder of Deeds. Donohoe received notice Wednesday that the upcoming auction has also been canceled.
The debt, issued in 2007, was one of several bundled into a larger pool of commercial mortgage-backed securities originated through Bank of America. The debt on 4000 Wisconsin Ave. was transferred last year to a special servicer, CWCapital Asset Management. Then, in June, the debt was sold to an affiliate of New York hedge fund DW Partners, which initiated next month’s planned auction, per Commercial Real Estate Direct.
Donohoe retained New York-based debt restructuring firm **Iron Hound Management** to help it work through the outstanding debt, and Wednesday’s deal was the result. Bruch said Donohoe was determined not to lose the property to foreclosure.
"We take pride in our reputation," Bruch said. "We're a 135-year-old business, we like to work things out, and we have a 40-year relationship with our partners in this deal."