Washington REIT Hires Cassidy Turley to Sell Region’s Largest Institutional-Quality Medical Office Portfolio

By Adrian Maties, Associate Editor

The Washington Real Estate Investment Trust (WRIT) recently selected Cassidy Turley to sell its 1.3 million-square-foot medical office portfolio in the Washington, D.C., region. The Cassidy Turley team that will market the portfolio includes Paul Collins, Bill Collins, Jud Ryan, Drew Flood and James Cassidy. J.P. Morgan will be co-agent.

WRIT is a leading owner and operator of diversified properties in the Washington, D.C., region. It recently reported fourth quarter and year-end financial and operating results for 2012 and announced a simplification of its diversified strategy to focus on office, multifamily and retail assets. To accelerate this strategy, the real estate investment trust decided to sell its medical office division.

The division consists of 17 institutional-quality medical office properties. It is the largest portfolio of its kind in the Washington, D.C., metro region and has very low leverage, with only three properties encumbered by mortgages totaling $24 million. The assets are all located in affluent communities or urban centers, near major medical centers such as INOVA Fairfax, Shady Grove Adventist and George Washington Hospital.

“Over the past 15 years, WRIT has assembled an exceptional medical office portfolio that accounts for 20 percent of the institutional-grade medical office assets in the D.C. metro area,” said Paul Collins, vice chairman with Cassidy Turley. “We expect the high quality of this portfolio and current marketplace demand for this product type to generate significant buyer interest.”

WRIT expects to gain embedded value through the potential sale of the portfolio. It should provide a lower cost of capital to continue to improve the quality, age and location of the company’s properties in its core office, multifamily and retail sectors.

Cassidy Turley, which named John Benziger as regional managing principal in the D.C. metro region at the end of January, has worked with WRIT before. In 2011, it sold the company’s 3.1 million-square-foot, 56-building industrial portfolio for $350 million.

Rock Creek Property Group Buys Properties Gospel Rescue Ministries-Owned Buildings, Plans Redevelopment

By Adrian Maties, Associate Editor

Rock Creek Property Group, a commercial real estate investment company founded in 2002, on Feb. 12 announced the acquisition of two adjacent buildings in the heart of Washington, D.C.’s Gallery Place/Chinatown neighborhood.

Constructed in 1932 on a 0.22-acre parcel, 808 and 810 Fifth St., N.W., total approximately 31,000 square feet. They are located within blocks of the Verizon Center and the Walter E. Washington Convention Center, and close to the Gallery Place/Chinatown Metro transit station.

The properties were purchased from Gospel Rescue Ministries of Washington, D.C. Rock Creek acquired the buildings through its Rock Creek Fund I Investors L.L.C. for just under $6 million, or $192 per square foot. The deal closed on Jan. 28. It was the fund’s sixth investment.

CBRE Group Inc. arranged the sale. Marc Rampulla, a first vice president of CBRE, represented the seller in the transaction. “The marketing process generated more than 10 written offers from local and national investors and concluded with a live auction for the finalists. Such dynamic interest demonstrates the aggressive attention that Washington, D.C., continues to attract from across the country. The East End demographics, amenity base and infrastructure continue to support redevelopment and long-term growth,” he said in a statement.

Rock Creek Property Group wants to convert 808 and 810 Fifth St., N.W., into a first-class, 50-unit residential development. The plans also include preserving the historical significance of the buildings and their surroundings. Rock Creek is also considering several other uses for the properties, such as university housing, corporate housing for the growing surrounding base of national law firms, and clinical/office use for faith-based and other non-profit organizations.

Photo credits: Rock Creek Property Group

Developers Break Ground on 310-Unit Apartment Project in Silver Spring

By Adrian Maties, Associate Editor

Insight Property Group L.L.C. of Arlington, Va., and Chevy Chase-based Nova-Habitat L.L.C. held a ceremony on Feb. 5 to celebrate the groundbreaking of Fenwick Station, a six-story, 310-unit apartment development in downtown Silver Spring. Neighborhood leaders and Montgomery County officials were also present at the event.

The new development is located two blocks from the Silver Spring Metro Station,  on the site of the former U.S. Post Office distribution facility at 8616 Second Ave. Fenwick Station will deliver a mix of studio, one- and two-bedroom apartments. Thirty-nine apartments will be affordable units.

Fenwick Station will include 11,000 square feet of amenity space, with a public plaza, a Capital Bikeshare station and a temporary walking and biking trail that will be connected to the future Capital Crescent Trail. It will offer residents a variety of recreational and social spaces, such as an outdoor dining room and pool, resident lounge and clubroom with kitchen and billiards, fully wired business center, fitness center, guest suite and rooftop terrace with an open-air TV gathering space and built-in bar.

The project is designed to achieve LEED Silver certification. A team of top-quality design and construction firms is working on it, including SK&I (lead architect), Hord Coplan Macht Inc. (landscape architect), PNC Bank (construction lender), John Moriarty & Associates (general contractor), Eagle Bank (acquisition lender), Loiederman Soltesz Associates Inc. (civil engineer) and SR/A (interior designer).

Montgomery County Department of Economic Development Director Steve Silverman thinks “Fenwick Station will improve the important connection between nearby neighborhoods and the downtown Metro core.”

Insight Principal Richard Hausler said, “Fenwick Station is located in a well-established residential neighborhood and at the same time offers residents immediate access to the Metro and all of the amenities of downtown Silver Spring. The large plaza area will also welcome residents from surrounding neighborhoods, with attractive benches, a water fountain for bikers and a gathering place for community events.” He added, “Silver Spring continues to experience very low apartment vacancy rates, with strong demand for apartments that are walking distance to the Metro, retail, restaurants and a large commercial jobs base. We received wonderful support from the surrounding communities and the county agencies as we went through the planning for this important addition to the Silver Spring community.”

Photo credits: Insight Property Group

Charts courtesy of Marcus&Millichap

901 New York Avenue Awarded LEED Gold Certification

By Adrian Maties, Associate Editor

The 901 New York Avenue office building, a skyscraper located at 901 New York Ave., N.W., in Washington, D.C., has earned LEED-EB Gold certification. The property is co-owned by Boston Properties and an institutional client advised by J.P. Morgan Asset Management.

Boston Properties developed the 11-story Class A office building in an effort to help revitalize the Mount Vernon Square neighborhood. It was completed in 2005, at a cost of $54 million. The 530,000-square-foot office building features four levels of below-grade parking, as well as 25,000 square feet of retail space on the ground floor. It was designed by Davis Carter Scott of McLean, Va. N.W. Clark Construction Group L.L.C. served as general contractor.

The U.S. Green Building Council awards LEED-EB Gold certification to buildings with a maximized operational efficiency and minimal environmental impacts. In order to achieve Gold certification, 901 New York Avenue implemented many sustainability actions, such as recycling more than 50 percent of the daily ongoing waste stream; achieving an ENERGY STAR label; introducing water-efficient plumbing fixtures; diverting 100 percent of the electronic equipment solid waste from the landfill as part of a comprehensive recycling program; reducing CO₂ emissions; and more. Leonardo Academy, a charitable 501(c)(3) nonprofit organization dedicated to advancing sustainability, was the LEED consultant supporting the successful achievement of the Gold certification.

Jeff Garner, director of engineering for Boston Properties’ Washington, D.C., region, said, “We are very proud to achieve LEED-EB O&M Gold certification for 901 New York Avenue. This initial certification was an especially rewarding process for the entire 901 New York Avenue property management team that ultimately made this effort a reality. Although we enjoyed a good start from our favorable sustainable site base and existing efficiency/conservation programs, actually obtaining certification required a tremendous amount of research, investigation, implementation, improvements and documentation, not to mention the commitment and support from our tenants. We are extremely pleased of what was accomplished and look forward to the continued privilege of operating the building as a LEED Gold facility.”

Photo credit: Boston Properties

Mill Creek Starts Construction on 360-Unit Alexandria Apartment Community

By Adrian Maties, Associate Editor

Mill Creek Residential Trust L.L.C. has started construction on a 360-unit apartment community in Alexandria, Va. It is developing the project as part of a joint venture with AEW Capital Management and the original land owners, represented by Green City Development.

The transit-friendly, mixed-use multifamily community is called Landmark Gateway. It is located in Alexandria’s West End, with excellent access to I-395 and I-495 and the greater Washington, D.C., metropolitan area. Cameron Station, an established master-planned community of more than 2,000 single-family homes and condominiums, is adjacent to the site; the Van Dorn Metrorail station and Landmark Mall Shopping Center, Alexandria’s largest shopping center, are less than half a mile away. Green City rezoned the site from industrial to residential mixed-use on behalf of Gateway Holding I, a venture between Green City and O’Connor Capital Partners.

Landmark Gateway will offer its tenants studio, one- and two-bedroom units, including junior one-bedroom floor plan and den options and ranging in size from 509 square feet to 1,132 square feet. Apartment features include 42-inch maple cabinets, stainless steel appliances, tiled backsplashes and baths, in-unit washers and dryers, Schlage keyless entry systems and moveable kitchen islands.

The developers will also add 15,000 square feet of retail space. Other community amenities include a state-of-the-art fitness studio, cyber cafe, demonstration kitchen, game room and television lounge. The first units are scheduled to be delivered in the summer of 2014.

“There continues to be a growing demand for quality rental housing in the greater D.C. area,” said Sean Caldwell, managing director with oversight for the development of Mill Creek. “Landmark Gateway’s ‘inside the Beltway’ location provides unparalleled access to key employers, shopping and entertainment districts, as well as an incredible amenities package designed to appeal to today’s renter.”

Mill Creek currently has 1,591 units in active leasing or under development in the greater Washington, D.C., market. Furthermore, it is not the only company trying to bring luxury apartments to the area. Toll Brothers Inc., the nation’s leading builder of luxury homes, has also recently purchased a development site in downtown Bethesda and plans to break ground this fall on a seven-story building with approximately 60 luxury condominium residences and underground parking.

Photo credits: Mill Creek

Charts courtesy of Marcus & Millichap.