Tishman pays down $600m of CarrAmerica portfolio debt

Tishman Speyer and SITQ have invested $700m of equity in a portfolio of 28 Washington DC office buildings in an effort to retire $600m of debt as well as fund working capital.

Tishman Speyer and its equity partner SITQ have invested $700 million of equity in a portfolio of 28 Washington DC-area office buildings to pay down $600 million of debt secured against the properties and fund working capital for the buildings. Tishman will continue to be the GP, property manager and leasing agent for all the properties.

Tishman had been in default on the $600 million of junior debt since last summer, and Brookfield Properties, which purchased roughly half of that debt at a discount, initiated foreclosure proceedings in April, according to the Wall Street Journal.

Tishman acquired the 28 properties, formerly known as the CarrAmerica portfolio, in 2006 for an estimated $2.8 billion, roughly $600 million of which came from a group of about a dozen investors, including Lehman Brothers Holdings and SITQ, according to the report.

The WSJ reported that about half of the original investors contributed capital to the $700 million injection, including SITQ and Tishman itself for $100 million.

The portfolio, which totals 6.3 million-square-feet and is approximately 88 percent leased, has roughly $1.6 billion of senior debt, which is current.

The properties in Washington DC include the Commercial National Bank building, International Square and “several prominent Pennsylvania Avenue buildings,” according to a statement from Tishman. The portfolio also includes assets in surrounding cities, such as Arlington and Alexandria in Virginia and Bethesda in Maryland.

“This is an excellent collection of high quality and well-located assets in one of the world’s strongest markets,” said Tishman Speyer president and chief executive officer Rob Speyer.

Tishman has been an active player in the DC office market for over the past decade, owning, managing and leasing more than 11 million-square-feet of office buildings in the area. SITQ is a real estate investment, management and development firm based in Montreal.

Last week, Tishman announced it had reached an agreement with its lenders to restructure a reported $1.4 billion of debt secured by five downtown Chicago office properties to cover financial obligations against the buildings and fund future leasing and operation costs.