The blade actually has two distinct abilities. The first is its Wounding effect, which causes targets to bleed for an additional 25 points of damage. The second is a pre-equipped stealth blade mod which deals an additional sneak attack damage multiplier of 0.6, as well as causing targets to bleed for an additional 10 points of damage over the course of 5 seconds. This stacks with the weapon's legendary modifier for 35 points of damage from bleeding per hit, and bleeding effects currently stack per hit, making this an extremely effective melee weapon even against higher level enemies later in the game.
The weapon is located inside a Master-locked wall safe, behind Pickman's painting "Picnic for Stanley". In order to get the key, one must work their way through the gallery and the connected sewers, and rescue Pickman from a group of raiders. Afterwards, when talking to him, he will express his gratitude, hand over his key and tell the Sole Survivor where to find their reward. Alternatively one may let the raiders kill Pickman then loot the key off him later, however, this will not prompt the player to go to the painting.
In order to find the painting he is talking about, return to the front door, then immediately enter the room on the left side of the hall. It will be a picture of a man's face; when the reticle is placed on it, a prompt to take it off the wall will be visible. This will reveal the wall safe, and within lies the blade, along with some caps and a thank you note, if Pickman is alive.