WashREIT Sells DC Office Portfolio to Brookfield Asset Management for $766M

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In its efforts to transition strictly as a multifamily REIT, WashREIT has come to an agreement to sell its office and retail assets in two separate deals totaling $936 million. 

Washington, D.C.-based WashREIT will sell a 12-asset, D.C.-region office portfolio, totaling a combined 2.371 million square feet, to Brookfield Asset Management for $766 million.

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“The well-located and diversified Class A office portfolio provides Brookfield with a strong opportunity to capitalize on office dislocation in one of the nation’s strongest markets at a very attractive basis,”  Ben Brown, Brookfield Property Group’s managing partner, told Commercial Observer. “Brookfield is already the second-largest commercial property owner and operator in the greater Washington, D.C area with 30 office properties comprising more than 8.5 million square feet, and the addition of the WashREIT office portfolio will only compliment and strengthen our presence in this growing gateway market.”

Additionally, the REIT has signed a letter of intent to sell eight retail assets to an undisclosed buyer for approximately $170 million.

Both sales are expected to close in Q3 2021.

“We are announcing the most significant milestone to date in our transformation into a multifamily REIT,” Paul McDermott, WashREIT’s president and CEO, said in a prepared release. “This transaction, along with sourcing multifamily expansion opportunities and our retail sales process, signals our belief that the multifamily asset class is the best vehicle to harness long-term growth for our investors.”

Currently, WashREIT’s multifamily portfolio consists of 21 fully stabilized assets across the D.C. area. It announced that it plans to invest $450 million to expand its multifamily portfolio in 2021.

Once both deals are finalized, WashREIT will be left with just one office property in its portfolio: Watergate 600, a 295,000-square-foot property located at 600 New Hampshire Avenue NW in D.C.

“Completing this sale will allow us to strengthen our balance sheet by eliminating near-term debt maturities until 2023,” McDermott said. “The company also intends to sell its remaining retail assets and use the proceeds from both sales to pay down debt and invest in new multifamily assets.” 

In December, WashREIT unloaded two office assets for $107 million. 

The office assets that WashREIT is offloading include six properties in Virginia and six in D.C.

The Virginia portfolio consist of the 75,000-square-foot 515 King Street in Alexandria; the 121,000-square-foot Courthouse Square in Alexandria; the 171,000-square-foot 1600 Wilson Boulevard in Alexandria; the 144,000-square-foot Fairgate at Ballston in Arlington; the 389,000-square-foot Arlington Tower in Arlington; and the 552,000-square-foot Silverline Center in Tysons.

The D.C. portfolio consists of the 101,000-square-foot 1775 Eye Street NW; the 103,000-square-foot 1140 Connecticut Avenue NW; the 34,000-square-foot 1220 19th Street NW; the 184,000-square-foot 1901 Pennsylvania Avenue NW; the 108,000-square-foot 2000 M Street NW; and the 189,000-square-foot Army Navy Building at 1627 I Street NW.

At the time of the deal, the portfolio was 83 percent occupied.