JP Morgan Plans Ownership Exit of Carr Properties, Taking Three Assets With It

J.P. Morgan Asset Management is bowing out of its ownership stake of a prominent Washington, D.C.-based development firm, and is taking some of the company’s buildings as part of the exit deal.

The finance conglomerate’s investment affiliate has entered into a nonbinding memorandum of understanding with Carr Properties, exiting its  35.5 percent stake in Carr in return for three of Carr’s properties, according to Bisnow, which first reported the news. It was not immediately clear which buildings are included in the ownership swap, though J.P. Morgan would acquire them clear of debt. 

Alony Hetz, an Israeli investment company and also a part-owner of Carr Properties, disclosed the deal as part of an investor filing it made in March. As J.P. Morgan prepares to shed its stake in Carr, Alony plans to move in with a $100 million equity investment. If the deal goes through, Alony’s holdings in Carr would jump from 47.8 percent to 77.2 percent.

Along with funding J.P. Morgan’s property redemption, the $100 million investment will go toward the “expansion of its business, with an emphasis on new ventures,” per the filing. Alony expects Carr to finish the year with about $600 million in equity. 

As it prepares for J.P. Morgan’s exit, Carr is also continuing its plans to sell two undisclosed properties for between $100 million and $110 million, as well as land refinancing deals for four properties with upcoming maturities in 2026. Carr aims to replace the debt on those assets with loans at long-term rates, according to Alony’s filing. 

A spokesperson for J.P. Morgan Asset Management declined to comment, while a representative for Carr did not immediately respond to requests for comment. 

Carr Properties — not to be confused with CarrAmerica, helmed by Oliver T. Carr Jr., the father of Carr Properties’ founders — operates a portfolio of mostly office properties across the DMV, as well as in Austin and Boston. That portfolio includes Midtown Center, an 869,000-square-foot trophy building in Downtown D.C. partly leased by Fannie Mae as its D.C. headquarters. Carr will retain ownership of Midtown Center, along with other trophy properties it built, in the wake of J.P. Morgan’s ownership exit. 

Still, D.C.’s poor office market has caused Carr some headaches. In November, it sold the 161,000-square-foot 2001 Pennsylvania Avenue NW to George Washington University for $35 million — barely a third of the $108 million that Carr paid for it in 2014. 

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