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April 3, 2008
Deal Sheet
(our more serious side)


Investment Sales

Typically, investment sales in the first quarter of any year are low. Sales that closed in the first quarter for this year, it hardly need be said, were exceptionally low.

Some last minute transactions that have been reported over the past several days, though, have bolstered Q1's finally tally for office sales, which is now $584.5 million, according to soon-to-be released figures from GVA Advantis.

Boston-based Pembroke, for instance, just closed on two buildings: 1000 and 1010 Vermont, acquired from Guardian Realty in Bethesda. The price was undisclosed—but GVA Advantis is reporting the sale to be $450 SF, or $63.8 million, for the two buildings, which total 141,000 SF. Pembroke apparently likes Washington real estate: it already owns two buildings here—1801 Pennsylvania acquired in February 2006, and 1201 New York, which it bought in Sept. 2006. With its third and fourth acquisitions complete, it now owns 700,000 SF in DC.

Grubb & Ellis' Wealth Management program, only in operation a short while, has been good to the DC area. Its latest acquisition here—or rather its latest investment here on behalf of a private investor—closed recently in Silver Spring. It acquired TechHill I & II, each 71,500 SF, in WesTech Business Park. Price was undisclosed. The seller was ING Clarion Partners, on behalf of an institutional client. Eric Berkman of Grubb & Ellis repped ING in this deal. He also repped the seller in another local deal in which Grubb & Ellis acquired a building for one of its investors in the same program: a 233,000 SF building in Frederick.

Another recent sale was of the Shirlington Gateway for $62.5 million. FCP sold the 95% occupied 206,992 SF building to an LLC. It traded at a 6% cap rate, according to one of the brokers that handled the deal, Paul Collins of Cassidy & Pinkard Colliers. Other brokers on the team were Bill Collins, Drew Flood and James Cassidy, all repping FCP.


Brookfield Properties   Brookfield Properties



Bethesda-based apartment lender Green Park Financial is formally stepping into the healthcare multifamily niche, establishing a new unit called Green Park Healthcare Finance. Richard Graham, a former vice president at Merrill Lynch Capital, is the unit's new group head and chief production officer—he's been on the job for about a week now. The unit will focus on independent-living, assisted-living and Alzheimer facilities for now, and then possibly expand to skilled nursing. Graham is expecting to invest $500 million this year.

Last month Green Park hired Anthony Washington as VP to build out its northeast loan portfolio, both for refinance and development. The investment goal for that initiative is $150 million for the year.

Howard Smith, EVP & COO says the firm is actively building out its platform right now. "We've got a wind at our backs with the originating agency business and now is a good time to expand." The company picked the northeast as a geographic play because its exposure there was not as great as it is in other parts of the country. As for healthcare—they have always liked the fundamentals of that space.  "We've done one-off deals before but nothing systematic."

Smith says he expects to see healthcare enter a period of consolidation, which will require new and more flexible financing. "I think there will be a lot of transaction business related to the buying and selling of healthcare asset pools."

One category he would like to expand into, but won't because the timing isn't right, is affordable housing. Both the expansion into the northeast and healthcare, "can deliver opportunities in the near term and can build up our business for the long term.  Affordable housing would fail that first test — it would be hard to bring in immediate business." Smith, though, really likes the category and would love to be convinced otherwise, especially if the right person came knocking at his door. "If that happened I would have to call you back and say I was wrong."



Next Friday the Newseum will be opening with the expected fanfare for such an event — Good Morning America will be there, among other media. Lois Zambo and Vernon Knarr were the Studley brokers behind the $100 million deal, which at the time — 2000 — was the highest price paid for DC real estate, according to Zambo. ($75 million for land and $25 million in a grant to the city).

An unusual transaction in many respects, Zambo remembers how the deal came to be as though it were yesterday. From the start — when Charles Overby, the Newseum's chief executive, contacted Studley about moving to downtown DC from Arlington — to the finish, when all the paperwork was finally signed, the entire process took an unheard of six or seven months, she says.

When the rest of the real estate community got wind something was happening with that parcel, competitors began circling, waiting for the city to put out an RFP — which it never did, she continues. But in the end that was ok. "Everyone was working so hard to get the entire city on board with this, eventually 10 of the major developers here sent the mayor a letter telling him he should go ahead with the transaction."


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