Starwood Property Trust is in the midst of transforming a long-vacant D.C. office building into around 270 apartment units, Bisnow has learned, marking the latest in a steady stream of conversions in the city’s downtown.
A covenant filed with the D.C. Recorder of Deeds earlier this month outlines the first details of a conversion plan for 1200 K St NW. Starwood CEO Barry Sternlicht has alluded to the plan on earnings calls over the past two years.
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According to the filing, the lower and first floors of the property are set to house retail and amenity space, while floors 2 through 12 will turn into 269 apartment units. On the roof, the mechanical penthouse level will be transformed into additional residential units and amenity areas, including a swimming pool.
The project was granted an interior demolition permit to make way for the conversion in December, according to records filed with the D.C. Department of Buildings. On Thursday, the entrance was surrounded by a temporary fence.
Starwood declined to comment for this story.
The 383K SF building at 1200 K sits half a block from Franklin Park and next to D.C.’s linguistic museum, Planet Word. Constructed in 1992, it served as the longtime home for the federal government’s Pension Benefit Guaranty Corp. But that agency vacated the property in 2022 in a move to The Portals in Southwest.
Starwood, as the lender, took the keys to 1200 K St. NW with a $44M credit bid at a May 2024 auction.
The building was formerly owned by Brookfield Properties and Australia’s largest pension fund, AustralianSuper. Starwood issued the owners a $120M loan in February 2021, but by the time it was sent to a foreclosure auction, the balance was $142.7M.
On the company's first-quarter earnings call in May, Sternlicht spoke optimistically about the project’s expected returns.
“In the time that we've taken the underwriting, rents have gone up, so our yields on cost could be even better than we thought, and expect they will be,” he said.
He estimated that the project would be another year to a year and a half.
D.C. has 8,479 office-to-residential conversion units in the pipeline, according to an April RentCafe report, placing it second only to New York for the most units slated for conversion.
The city has a 20-year tax abatement for conversions in the downtown portion of the city. That program has helped at least 10 conversions move forward, set to total 2,563 units. It’s unclear if 1200 K will take part in the incentive.
