Stonebridge, Bernstein JV Lands $53M for Big D.C. Office-to-Resi Project

An adaptive reuse project in Washington, D.C., utilizing the city’s Housing in Downtown (HID) tax abatement program has secured new funding from the private sector.

A joint venture composed of Stonebridge, the Bernstein Companies and Criterion Capital have landed $53 million in acquisition and pre-development financing toward 1990 K Street NW, a 14-story, 297,000-square-foot office building in Downtown D.C. The JV plans to redevelop the office into 453 apartments, 48 of which will be designated affordable. The property will be redubbed as 1999 Eye Street NW, per the city.

Lionheart Strategic Management, an affiliate of Fisher Brothers, along with Schroders Capital and Forbright Bank provided the debt. The project will benefit from tax relief via the District’s HID program, aimed specifically at incentivizing office-to-residential conversions. The program is currently capped at $2.5 million through this fiscal year, but will rise to $41 million by FY 2028, with additional 4 percent increases annually. 

“This is an exciting opportunity to reimagine 1990 K as a new residential community in the heart of downtown. … The HID program allows us to deliver housing where it’s most needed,” Kent Marquis, principal at Stonebridge, said in a statement.

The first residents of the redeveloped property are expected to move in by May 2028. 

D.C. Mayor Muriel Bowser announced the project earlier this month, alongside two other conversion projects that would also receive the HID benefits. Eight projects, which together total 1,745 units, currently receive tax relief from the program. Bowser’s administration hopes to add 15,000 new residents to Downtown D.C. by 2028. 

The city has become a metropolitan leader of adaptive reuse projects in the process, as it currently has more conversion units per capital in the pipeline than any other metro in the country, according to a recent report by RentCafe. 

“These eight projects demonstrate how the mayor’s $41 million investment in the HID program is already paying off for District residents, businesses, and visitors in helping to create a downtown where people can live — not just commute to and from work,” Nina Albert, deputy mayor for planning and economic development, said at the time. “And the potential for HID is growing, as budgetary changes starting this fall will allow us to consider even more potential projects for the program.” 

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