Henderson Park, Lowe JV Lands $180M Loan Toward D.C. Office-to-Resi Project

More housing development is on the way for Washington, D.C., as a joint venture secured a hefty loan for an office-to-resi conversion in the southwestern area of the city about a month after an adjacent multifamily project landed $195 million of its own.

Henderson Park, an international private equity firm, and Lowe, a Los Angeles-based real estate investment and development company, together clinched $180 million in construction financing toward Portals 1, an eight-story, 536,000-square-foot office in Southwest D.C. 

Deutsche Bank led the debt package. Representatives for Deutsche Bank did not immediately respond to a request for comment, and a spokesperson for the JV declined to share further details about the loan.

The JV plans to convert Portals I, at 1250 Maryland Avenue SW, into an 11-story, 658,000-square-foot apartment complex with 428 units and 53,000 square feet of retail and commercial space. 

“One of the many benefits of converting office buildings to residences is the ability to take advantage of the large existing office floor plates to offer generously sized units and abundant amenities,” Mark Rivers, Lowe’s executive vice president, said in a statement. “These residences will average over 1,000 square feet, ranging from studios to three-bedroom apartments. Most of the residences will have large balconies or terraces that span the width of the unit, also made possible by the deep existing office floor plates.”

Developed by Republic Properties in 1992 as the first phase of its Portals project, Portals I had suffered a slow decline of occupancy, ultimately resulting in its sale in 2017 to LNR Partners, the special servicing affiliate of Starwood Properties Trust, for $84 million. Yet occupancy continued to drop, sinking to just 35 percent in the summer of 2023, Morningstar reported at the time.

Enter Henderson Park, which purchased the property in late 2023 for just $26 million, despite its assessed value of $164 million at the time. Lowe had previously filed plans with the District to convert the property into apartments. 

“Securing the construction financing marks a major milestone in our plans for 1250 Maryland,” Nick Weber, Henderson Park founder and CEO, added in a statement. “The project achieved design approval from the [U.S. Commission of Fine Arts] and has executed a design-build construction contract with leading international contractor, Balfour Beatty. These initiatives significantly de-risk the project, enabling us to begin the full-scale ‘brown to green’ transformation from outdated office space to 428 modern residential apartments.”

The purchase of Portals I was not Henderson Park’s first foray into properties developed by Republic in the area. In 2022, Henderson Park paid $139 million to Mandarin Oriental for the 373-room hotel at 1330 Maryland Avenue SW, now branded as Salamander Washington, D.C. Republic had developed the property for Mandarin as part of the Portals series in 2004. 

Republic in May, meanwhile, landed a $195 million construction financing package to build Portals IV, a 356-unit, mixed-use project officially dubbed 1301 after its address at 1301 Maryland Avenue SW. The long-gestating project will join Portals V, the other multifamily property at the Portals complex which was completed in 2020. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.