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Notes: Patent and Trademark Office downsizing puts Alexandria’s largest landlord in hot water

Good Thursday morning, Alexandria!

🌤️ Today’s weather: The forecast predicts a mostly cloudy day that will gradually turn sunny, with temperatures reaching around 78°F. A northeast wind of around 9-13 mph will be present, accompanied by gusts as high as 22 mph. As for Thursday night, expect mostly clear skies and cooler temperatures with lows around 60°F, along with north winds at a speed of 7-9 mph.

🚨 You need to know

Out and about on a cloudy, cold day near the US Patent and Trademark Office (Staff photo by Jay Westcott)

Credit rating agency Moody’s Investors Service said the U.S. Patent and Trademark Office (USPTO) property is at high risk of default, the Washington Business Journal first reported.

The downgrade comes after the USPTO announced it would downsize its office space in Alexandria. Like many office building owners, LCOR Alexandria LLC has struggled to find tenants to fill that space.

Moody’s bumped the credit rating on the $60.2 million bond down to Caa1 — investor speak for a junk rating, according to the more business-savvy reporters at the Washington Business Journal.

According to Moodys:

The underlying rating downgrade to Caa1 reflects the high risk of default on the senior debt as early as December 2024, when the borrower will likely be unable to make its full principal and interest payments. In that event, the bond insurance policy will be triggered to fully cover the $10.1 million mandatory sinking fund redemption. The increased risk of default is largely due to the inability, to date, of the owner/borrower to secure new tenants in the two buildings on the USPTO headquarter campus that will become vacant after August 2024. Absent new tenants, shell rent on the three remaining buildings occupied by USPTO will not be sufficient to cover senior debt service in full.

Many Alexandria office developers have been turning to conversions, replacing office buildings with residential ones, but that’s another discussion.

📈 Wednesday’s most read

The following are the most-read ALXnow articles for Aug 30, 2023.

  1. Four-story apartment building proposed in Old Town Historic District
  2. Alexandria launches public comment process for Eisenhower Avenue changes
  3. Despite flurry of new apartments, experts say Alexandria has a housing shortage

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