Quiet Giant on 7th Street
It's one of the largest pension fund advisors in the country and has had a hand in some of the nation's largest mixed-use projects. It's invested in about $6B worth of real estate over the years. And you may have never heard of them. But quietly, National Real Estate Advisors is helping change the urban core of America.
CEO Jeff Kanne might prefer that you don't know much about his firm, as long as the investment community does. DC-based National has historically shied away from broad media exposure, letting its investments tell the story instead. As an investment manager for several massive pension funds (many of which are in the electrical industry), National quietly invests debt and equity in every major market throughout the US across all asset classes. "Generally we focus on urban core developments, since that's where the economic dynamism of the future is," says Jeff, a lawyer by trade who's led National and its predecessor for 15 years. And the firm's strategy has paid big dividends, literally: Jeff says the firm has experienced annual double-digit returns for its investors for each of the last 14 and a half years.
Above, the firm's 900 7th St HQ. Though National doesn't market itself as broadly as other investment advisors, Jeff says the firm has "about 50 to 60 institutional investors" that it attracts through a deep network of relationships and industry clout. "We've been at this a long time, and we see far more opportunities than we can handle," he says. While it typically provides mezzanine debt and equity in the development stage of new projects, National will periodically provide construction financing or credit enhancements, too.
Last night, National celebrated the opening of Bainbridge Bethesda, a 200-unit apartment complex it invested in on behalf of one of its funds. (We snapped the firm's Michelle Johnstone and JLL's Luca Barber on the rooftop.) Down the street, it's involved with a site it's trying to rezone to build more apartments. It also financed the development of its 7th Street HQ, a hefty portion (with Akridge and an English investor) of the Buzzard Point site in Southwest DC, where the DC United stadium will (fingers crossed) eventually be built, and an apartment project at the Shady Grove Metro that will soon deliver. National also owns land out in Ashburn where a data center complex could soon be built—about 10% of the firm's portfolio is in data centers, Jeff says. National is also the capital, with Lowe Enterprises, behind the upcoming residential addition to the Washington Hilton, called the Dupont Residences.
In NYC, it was the money behind the innovative 8 Spruce St apartments in the Financial District, along with partner Forest City. In 2012, it sold a 49% interest in that property to TIAA-CREF—the deal valued the building at over a billion dollars, at the time believed to be the highest valuation for an apartment complex in the US.
National also just topped out on two major projects: a 418-unit apartment complex in downtown San Francisco, as well as a 378-unit building in the South End of Boston. It's also gearing up to start construction on a big mixed-use project on Market Street in Center City, Philly (rendering above), and is in the middle of a big mixed-use redevelopment in the heart of Los Angeles called the BLOC. All in all, Jeff says that National is currently involved in financing and developing over 20 projects throughout the country.