UBS Trades DC Office Asset for $54M

By Barbra Murray

1100 G St. N.W., Washington, D.C.

In transactions valued at $79 million, the office building at 1100 G St. N.W. has been sold and financed with the help of HFF. Pulling double duty, the commercial real estate services provider successfully marketed the 110,000-square-foot property on behalf of the seller, and arranged acquisition financing for the buyer.

Located above a Metro station, 1100 G St. first opened its doors in 1968. Until J Street Cos. and UBS Asset Management acquired the 11-story tower for $41 million in 2008, it carried the address of 666 11th St. N.W. A decade later, UBS has pocketed $54 million on the asset’s sale to a partnership involving Meritage Properties and a Japanese private investor advised and represented by Tokyo Trust Capital Ltd.

“1100 G Street falls squarely within our strategy of acquiring well-located urban office properties that can benefit from the kind of hands-on renovation and repositioning that has become the hallmark of the Meritage brand,” Andy Nathan, CEO of Meritage Properties, said in a prepared statement.

The financing for the partnership’s purchase of the asset came in the form of a five-year, floating-rate loan that HFF placed through an unidentified lender. The HFF team representing the seller included Stephen Conley, Jim Meisel, Andrew Weir, Matt Nicholson and Dave Baker.

DC’s cross-border allure

Tokyo Trust Capital is just one of a bevy of foreign investors showing a keen interest in the Washington, D.C., office market this year. During the first quarter alone, Munich-based reinsurance company Munich RE acquired the 214,100-square-foot property at 1440 New York Ave. N.W. for $254.5 million. Just a few buildings over, suburban Paris-based AXA Investment Managers and a joint venture partner shelled out $166.2 million to add a majority stake in the 211,500-square-foot tower at 1401 New York Ave. N.W. to its portfolio. And in a transaction that broke the record for the largest office sale on a per square-foot basis in Washington, D.C., Spain’s Corporacion Masaveu S.A. acquired the 112,600-square-foot building at 900 G St. N.W. for $144 million, or a whopping $1,238 per square-foot.

Continued cross-border attraction to the District’s office market is expected to continue, despite an undesirable change in fundamentals, according to industry experts. “With repressed demand, coupled with the exorbitant amount of new product to deliver, the overall vacancy rate will increase over the next 18 months. Despite this upcoming vacancy in the market, it has not discouraged foreign money looking to invest in the District,” per a 2018 first-quarter report by commercial real estate services firm Colliers International.

Image courtesy of HFF