Friday, March 12, 2004

Wachovia Flipping Pepco HQ in DC After Long Term Leaseback

Real Estate Alert reports that Wachovia is apparently flipping a single-tenant Washington office building it acquired in September. The bank is reportedly selling the 353,000-square-foot Edison Place at 701 Ninth Street NW to Brookfield Properties of Toronto for about $166 million, or $470/sf. Brookfield's initial annual yield would be about 5.8%.

Wachovia acquired the 10-story property just five months ago for $151 million, or $428/sf, for a cap rate of 6.4%. The seller was Potomac Capital Investment, a unit of Pepco, the Washington-area electric utility. Cassidy & Pinkard brokered the deal. Wachovia is not using a broker with the Brookfield transaction.

The building, which was constructed in 2001, is fully leased to a unit of Pepco, PHI Service, through 2025. It is estimated that PHI pays a triple-net rent of roughly $27/sf. The property consists of 329,000 sf of office space, 24,000 sf of street-level stores, a small amount of storage space and a 416-car underground garage.

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