CPExecutive.com - September 3, 2009
In Washington, D.C.--which was named the best urban real estate market in the world by the likes of the Association of Foreign Investors--Germany-based DekaBank Group’s recent $207.8 million acquisition of the newly developed 250,000-square-foot 1999 K Street office building came as little surprise to many, even given the slow investment market nationwide.
Vornado Realty Trust sold the property in an off-market deal to the DekaBank Group, which is the largest provider of open-ended property funds in Germany. The two investment companies, Deka Immobilien Investment GmbH and WestInvest Gesellschaft für Investmentfonds mbH, together manage fund assets of more than EUR 19 billion.
The building was designed by internationally recognized architect Helmut Jahn and achieved LEED-CS gold certification.
Designed by Helmut Jahn and recently awarded a LEED-CS Gold certification, the office property was completed in August and serves as the new headquarters for the law firm Mayer Brown. The building is 100 percent pre-leased to the law firm, which occupies the entire 12-story building as part of a new 15-year lease. In addition, TD Ameritrade occupies a 5,000-square-foot retail unit on the ground floor. Vornado will continue to manage the property.
“I’m not surprised by this deal. This is a trophy quality asset and the prices were on target. There is alot of liquidity in the marketplace and we’re seeing more activity,” Collins Ege, managing director for Jones Lang LaSalle, told CPE. “There is more activity going on in Washington, D.C. We’re closing a transaction this week and we’re probably busier now than we have been in the last 12 months. We have four deals under contract and we’re seeing other deals in development.”
A deal like this demonstrates that the Washington, D.C., area is a good location and still a viable marketplace, he added.
The $207.8 million sales price is $830 per square foot and is a first year cash cap rate of 6.3 percent. Vornado realized a net gain of approximately $41 million and received net proceeds of approximately $90 million after repaying the existing loan and costs.
CB Richard Ellis Inc.'s buy-side investment advisory group, Global Property Advisors, with the support of the firm's Washington D.C., Capital Markets team, represented Deka in the transaction.
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