A private equity fund based in Mexico City, Aztec Fund Holding, has recently sold off two office properties in the D.C. area as part of its Chapter 11 bankruptcy liquidation process.
The sales occurred this summer, with the proceeds earmarked to pay Bank of America, the fund’s secured creditor, which was owed approximately $115.7 million as of last October.
In Prince George’s County, Aztec sold the Bowie Corporate Center located at 4321 Collington Road for $9.6 million, according to court filings and Maryland property records.
This suburban office building, spanning 126,000 square feet, was acquired by Aztec for $24.8 million in February 2021, marking the highest sale price for such a property in the county over the last decade.
By last October, the building was appraised at $20.1 million.
At the time of its sale, the office building was 95% leased to Inovalon, a healthcare software company, under a lease that extends through June 2029.
The buyer was the Namdar Realty Group, a Long Island-based firm known for acquiring distressed properties, including struggling shopping malls, and now targeting troubled office spaces.
In addition to the Bowie Corporate Center, Aztec also sold the Mark Center, a 240,000-square-foot office building located at 2001 N. Beauregard St. in Alexandria.
This property was sold to an affiliate of the building’s sole tenant, the national security contractor Systems Planning & Analysis, for $29.3 million.
Aztec originally purchased the Mark Center for $71.7 million in February 2021, with the property being appraised at $64.6 million last October.
Neither Haddad, Namdar, nor representatives from Systems Planning & Analysis responded to requests for comments on the transactions, and Bank of America declined to comment on the matter as well.
In January 2021, Bank of America granted Aztec a loan of $202 million, secured by nine properties, including the three that were sold this summer.
According to the initial Chapter 11 filing by Charles Haddad, president of the debtors in Aztec Fund Holding, the fund invested $80 million of equity into the properties.
These properties cover nearly 700,000 square feet.
The situation escalated in May 2024 when Bank of America foreclosed on five of the properties located in Texas, recovering between 23% and 70% of their original appraisals, as reported in court documents.
Haddad explained in his filing that the decision to allow the lender to proceed with foreclosures was reluctant, noting those properties were among the most distressed in terms of occupancy and capital improvement needs, which could amount to approximately $30 million under market conditions.
Despite the initial plan to foreclose on four remaining office properties that summer and fall, this process was halted by Aztec’s bankruptcy filing in August 2024.
Haddad articulated that challenges stemming from the pandemic, including low office demand, the impact of the loan’s floating interest rate, and declining tenancy, hindered the profitability and stabilization of the properties.
Furthermore, filings from Bank of America in October indicated a significant decrease in the portfolio’s property values after the loan was originated.
The lender had offered a period of forbearance yet noted that for nearly two years, both Aztec and its equity holders struggled to address the loan’s maturity or provide necessary capital to maintain the value of the properties securing the loan.
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