Cerberus JV to Repurpose Former Discovery Communications HQ
- Dec 10, 2018
A joint venture between an affiliate of Cerberus Capital Management L.P. and Foulger-Pratt is the recipient of a $96.5 million loan for its purchase of One Discovery Place, the former Discovery Communications headquarters in Silver Spring, Md., in metro Washington, D.C. The financing deal was announced by JLL Capital Markets, which secured the loan for the buyers.
The 478,130-square-foot trophy office building will be vacated soon, as Discovery Communications, which was founded in Landover, Md., in 1985, moves its headquarters to New York City following its purchase of Scripps Network Interactive earlier this year.
JLL Capital Markets Senior VP Paul Spellman led the team that arranged the financing on behalf of the borrowers. The floating-rate loan was secured through a U.S.-based private lender.
“There was a tremendous amount of competition for One Discovery Place, which was enhanced by the outstanding sponsorship,” Spellman said in a prepared statement. “This was a great financing case study, as we rarely see vacant building opportunities of this asset quality in the DC Metro.”
One Discovery Place is in downtown Silver Spring, within walking distance of the Metro, MARC and future Purple Line rail, and about 1 million square feet of restaurants, shops, theaters and entertainment venues. When it was completed in 2004, the building was one of the first in the nation to receive LEED Platinum certification.
The new owners reportedly plan to reposition the property for new tenancy. Cerberus did not respond to Commercial Property Executive’s request for additional information.
Back in January, Discovery Communications announced plans to move its headquarters, and in June the company selected 230 Park Ave. S. as its location, where it will start consolidating other offices next fall.
Also in June, the company stated that it would exit its sizable space at 850 Third Ave. in New York. The sale of One Discovery Place was announced in September.
Discovery Communications owns such popular cable channels as Animal Planet, TLC and the Discovery Channel.
Soft, but not terribly so
Recent figures on the Silver Spring office submarket suggest that the purchasers of One Discovery Place have taken on some risk in buying an imminently empty building—unless they have an anchor tenant already lined up.
Counting Discovery Communications’ pending vacancy, availability in Washington’s Maryland suburbs (will) hit 18.4 percent, or a whopping 200 basis point jump year-over-year, according to a third-quarter report from Savills Studley. The report immediately adds, however, that office demand is strong in the Maryland suburbs, with more than 2.9 million square feet of leasing through the third quarter.
That said, the strongest part of Montgomery County remains around Bethesda and Chevy Chase, where transit-oriented projects and ample amenities are powerful pulls for tenants. Nonetheless, the overall suburban Maryland market continues to favor tenants, Savills Studley concluded.
Image courtesy of JLL