Guardian Nabs DC Office for $54M

The Tower Building, a 124,700-square-foot office property with a full tenant roster along Washington, D.C.’s famed lobbyist-laden K Street Corridor, has traded in a deal valued at $53.8 million. Acting on behalf of an institutional fund, Guardian Realty Investors L.L.C. acquired the Art Deco building (pictured) at 1401 K St., N.W., from AEW Capital Management L.P., which made the sale on behalf of an institutional client seven years after having purchased it from Starwood Capital Group for $23.7 million. The credit crisis is not keeping investors away from the District. “D.C. is fortunate; there is a fair number of all-cash buyers in the marketplace, and leveraged buyers, too,” John “Drew” Flood, managing director with real estates services firm Cassidy & Pinkard, which marketed the property on behalf of the seller, told CPN. “There was a loan on this deal.” Located in the East End submarket and listed on the National Register of Historic Places, the Robert F. Beresford-designed Tower Building was originally developed in 1929, and in 1997, underwent a comprehensive $15 million upgrade at the hands of Starwood. Today the building is 100 percent leased to a list of 27 tenants that includes law firms, lobbying firms, trade organizations, an engineering company, as well as coveted restaurants DC Coast and Lima, which occupy approximately 11,000 square feet of retail space. “This asset had a lot of interest from both domestic and overseas buyers,” Flood said. “It has a great location and near-term rollover of below-market in-place rents.” Although officially located in the East End submarket, The Tower Building is just a stone’s throw from the Central Business District and one block from a Metro station. Additionally, 43 percent of the building’s leases are scheduled to expire by 2010, leaving the opportunity for the new owner to take advantage of market rate rental rates at a property where the office rents are 20 percent below market rate and retail rents are approximately 50 percent below market rate, according to Cassidy & Pinkard’s marketing information. Headquartered in North Bethesda, Md., Guardian Realty Investors operates a private institutional REIT and investment vehicles that own and operate 49 office properties valued at an aggregate $750 million in Washington, D.C., Suburban Maryland and Virginia. The 40-year-old company engages in the acquisition, development, financing, leasing and management of office buildings, and has purchased and sold properties totaling more than $600 million over the last three years. Boston-based AEW Capital Management is a global real estate investment advisor that, along with affiliates, manages approximately $36 billion of capital invested in over $50 billion of property and securities in North America, Europe and Asia.