Hines Reportedly Handing Back The Keys To D.C. Office Building After Law Firm Departure
Hines is giving up on a Downtown D.C. office building it has owned for over a quarter century, reaching an agreement with its lender to relinquish the property after its anchor tenant departed for a new waterfront development.
The Houston-based real estate giant and its partner, Dallas-based Sarofim Realty Advisors, signed a deed-in-lieu-of-foreclosure agreement with the lender, Allianz Real Estate, for the office building at 700 11th St. NW Real Estate Alert reported Tuesday.
A spokesperson for Hines declined to comment. Allianz and Sarofim didn't immediately respond to requests for comment.
Hines has owned the property since 1994, when it acquired it with a different partner for $60M from Wells Fargo. The bank had acquired it in 1992 for $48M at a foreclosure auction after the Oliver Carr Co. completed it the prior year at a price tag of $100M, The Washington Post reported in 1994.
The 12-story property, sitting atop the Metro Center station, is considered the second-tallest office building in D.C., standing at 199 feet, according to the Council on Tall Buildings and Urban Habitat.
Now, Allianz is open to selling the building at a discount of $281 per SF, or about $90M, marketing the property as an office-to-residential conversion opportunity.
In addition to its office space, the building also features ground-floor retail and 324 underground parking spaces. Eastdil Secured is marketing the property.
Hines' move to give back the asset comes as the D.C. office market struggles with record-high office vacancy rates and as demand has lagged since the start of the pandemic. Owners of older office buildings in Chicago and New York have also handed back the keys to their lenders this year.
The 11th Street listing joins another East End office building marketed by its lender as an office-to-residential conversion.
The $155M loan for the property, located at 450 Fifth St. NW, is set to mature at the end of the year. DOJ announced earlier this year that it would move out of the property, owned by an affiliate of Clark Enterprises, in 2025.
As the commodity-grade office would then go dark, the loan is expected to sell at a discount, according to Real Estate Alert.