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Real Estate Bisnow
January 8, 2013  
WorkSpaces (Left2) DCRE
DC Falls to 4th Among Foreign Investors

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San Fran has leap-frogged DC among most preferred cities for international capital; we get 13% of the vote compared to 26% for #3 SF. But that wasn't the only surprise in AFIRE's recent member survey.
AFIRE's Jim Fetgatter - January 7, 2013

Association of Foreign Investment in Real Estate CEO Jim Fetgatter (snapped in his office yesterday) tells us office and multifamily remain popular (and flashy) acquisitions for overseas buyers, but industrial is the No. 2 preferred product type in AFIRE’s annual member survey (released yesterday). He says foreign buyers like the consistent yields and new demand drivers, such as online retailers like Amazon. The survey results were razor-thin though, as industrial ranked just behind multifamily and just ahead of retail and office.

Kane (OfficeShred2) MDCRE
Homer Building

Jim says though DC has fallen behind, foreign investors will continue to buy here following 2012 deals like Mitsui Fudosan’s pickup of a stake in the Homer Building, above). He says some new international players may buy here, including from South Korea and Norway, which recently authorized its pension fund to look for US real estate investments. We always thought the Artisphere roof would make a good half pipe. Show us the money, Norway.

Debra Lacy, Shak Preswala

Lacy Ltd prez Debra Lacy (above, with Shak Presswala of Jamestown, a German investor that bought DC's 733 10th Street last year) says foreign investors joining forces with US partners like Vornado, Carr Properties, Harbor Group, and Rockefeller Group, who've all had foreign investment partners in recent years, should produce some local activity. She mentions the Chinese may emerge as a player, as well.

2175 K St

Here's 2175 K St, which German fund Deka Immobilien purchased Dec. 19 for $86.4M. Jim adds that the fiscal turmoil on the Hill worried foreign investors (deal volume slowed at the end of 2012), but they remain optimistic, confident the country won’t double-dip. After all, Jim says, US real estate is "one of the few alternatives in the world for safe investment."

Behind Greystar & EQR’s $1.5B Deal

Bob Faith on Jan. 8, 2012

Greystar CEO Bob Faith (snapped this morning) tells us his firm’s acquisition (with Goldman Sachs) of 8,010 apartments across 27 properties from Equity Residential will close in two tranches by the end of March. Greystar is free to exclude as much as 8% of the portfolio from the deal after more-intense due diligence on the individual properties, but Bob tells us his intention is to take them all. All the parties know each other well, he says. Goldman Sachs owns 20% of Greystar, and as co-founder of Starwood Capital, Bob sold a large portfolio to Equity Residential in 1993, so when Equity said it wanted to sell, it was a logical phone call for Bob to make. He says the portfolio is 95.5% occupied, but he feels there is value to be harvested via improvements on many of the properties that could lead to higher rents.

The Townes at Herndon Center

The best part about buying from a public company, Bob says, is all the property info is “available.” Greystar was able to shop Equity Residential’s portfolio and propose a geographically diverse portfolio. The deal includes 1,744 DC units in Cascade at Landmark in Alexandria, Ellipse at Government Center and The Windsor at Fair Lakes in Fairfax, The Townes at Herndon Center (above) and Westerly at Worldgate in Herndon, and Waterside in Reston. Bob tells us DC, the one market where multifamily investor interest has cooled recently, is a countercyclical investment opp.

New Carrollton's New Look
Vicki Davis

You might think of the area around the New Carrollton Metro as the last stop on the Orange Line or as a hub of everyone’s favorite gov agency, the IRS. But soon, says Urban Atlantic prez Vicki Davis, it'll be a bustling mixed-use playground, thanks to last week's announcement that WMATA, which owns the 40 acres surrounding the station, has approved the Urban Atlantic and Forest City Washington-led development of the site. Vicki tells us the land is one of the most accessible in the region, at the crossroads of 495 and Route 50, along with Metro and Amtrak components.

New Carrollton Metro

The site will house as much as 4M SF, an equal mix of office and grocery-anchored retail. Groundbreaking will occur “as early as the beginning of 2014,” Vicki says, adding that the site’s accessibility will allow as many as 3,800 new jobs. The site has town-center zoning, she says, which could give other town centers like Reston and Rockville a run for their money.

$107.5M Buy in Woodbridge
Rolling Brook Village
The Rockville-based Donaldson Group and partner Angelo Gordon have made a big splash in Woodbridge, purchasing the 732-unit Rolling Brook Village apartments for $107.5M. Donaldson SVP John Majeski tells us his firm loved the submarket's projected rent growth, benefiting from the influx of jobs to nearby Fort Belvoir and Quantico (thanks, BRAC). Eastdil brokered the deal.

Econometrica Keeps Bethesda Strong

Scott Randolph, Susan Kay

Transwestern's Susan Kay (snapped yesterday with colleague Scott Randolph) says 2012 saw Bethesda office landlords offering "concessions we never thought we'd see" like rent abatements, huge TI packages, and below-market rents. Nevertheless, deals still happened, such as consulting firm Econometrica's 23k SF lease at Brookfield's 7475 Wisconsin Ave, which Susan and Scott closed New Year's Eve on behalf of the tenant. Though "people are cautious" about Bethesda's leasing market, she says, we can probably expect healthy deal volume to continue in 2013. Econometrica, relocating from 4416 East-West Hwy, will occupy its space in two phases, starting in May.

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