Here's What Brookfield Paid WashREIT For 5 D.C. Office Buildings As Part Of Portfolio Sale
The picture of how much commodity office buildings in D.C. are selling for post-pandemic is getting clearer now that the prices Brookfield Asset Management paid for a chunk of WashREIT's office portfolio have become public.
The D.C.-based REIT announced last week it closed on the 12-building, $766M portfolio sale, which was the culmination of a major restructuring effort, and documents were posted Tuesday in the D.C. Recorder of Deeds showing the individual sale prices for five D.C. office buildings.
- The office building at 1775 Eye St. NW sold for $80.5M, deed records show. The building, constructed in 1964, is 87% occupied and totals 188K SF, according to WashREIT's Q2 earnings supplement, meaning the sale came out to $428/SF.
- The Army-Navy Building at 1627 Eye St. NW sold for $64M, deed records show. According to WashREIT's Q2 earnings, the building was 97% leased and totals 108K SF, putting the deal at $593/SF.
- The 1901 Pennsylvania Ave. NW office building sold for $40.3M, deed records show. It was 81% leased as of Q2 and totals 101K SF, putting the deal at $399/SF.
- The 1140 Connecticut Ave. NW office building sold for $38.8M, deed records show. It was 82% leased as of Q2 and totals 184K SF, putting the sale at $211/SF.
- The building at 1220 19th St. NW sold for $24.25M, deed records show. Built in 1976, it was 85% occupied as of Q2 and totaled 103K SF, putting the deal at $235/SF.
The sixth D.C. building sale it announced it was selling to Brookfield, 2000 M St. NW, appears to be owned under a ground-lease structure and the latest sale wasn't recorded Tuesday. The six other office buildings in the 12-property portfolio were in Northern Virginia, with three in Arlington, two in Alexandria and one in Tysons.
WashREIT still owns one office building, 600 Watergate, which it said in June it plans to sell separately "when practicable." WashREIT CEO Paul McDermott said on the firm's Q2 earnings call last week it expects to hold onto the property at least for the rest of this year, calling it the "best office asset that we had owned," according to a Motley Fool transcript.
The REIT also said in June it had signed a letter of intent to sell its eight remaining retail assets, as it shifts to becoming a multifamily-only REIT. WashREIT also said it plans to expand its multifamily portfolio to new Southeast markets including Atlanta, Charlotte and Raleigh-Durham, and it plans to focus on middle-income renters.
On the earnings call, McDermott said WashREIT sees strong growth drivers in the multifamily sector, a stark contrast to what it was seeing in the office market.
"In office, we were facing challenging and increasing headwinds, including increase in capital requirements, and we expect those headwinds to continue," McDermott said. "This contrast in growth prospects boosts our confidence that will create more values for our investors going forward through our portfolio recalibration."
The company said in June that it aims to transfer the majority of its office personnel to Brookfield, and on the earnings call McDermott said he is grateful to the departing staff and will miss them.
"I'll be blunt, it's been an emotional week here, saying goodbye to colleagues that we've had the privilege to work with as we work up to this transformation," McDermott said, according to the transcript. "But what that has left us with is an outstanding multifamily team to build a platform off of."