ICG, JBG Strike $101.5M D.C. Deal

ICG Properties first sold the 280,000-square-foot Georgetown Center to JBG Cos. The two companies then struck a partnership deal on ownership of 1601 K St.

March 21, 2011
By Barbra Murray, Contributing Editor

The transaction volume in the Washington, D.C., office market continues to climb and a two-property, $101.5 million deal between ICG Properties and The JBG Cos. has just increased the number.

For starters, ICG sold the 280,000-square-foot Georgetown Center to JBG. ICG had owned the complex since acquiring its two six-story buildings in separate transactions years apart. The company bought Georgetown Center II, a 23-year-old structure encompassing 180,000 square feet at 2115 Wisconsin Ave., in 2002 in a joint venture with Fidelity Real Estate Group, and later acquired Fidelity’s interest in a $40 million recapitalization in 2004. In 2006, ICG purchased the 51-year-old, 100,000 square-foot Georgetown Center I at 2121 Wisconsin Ave. for $22 million. Currently, Georgetown Center is 92 percent leased with Georgetown University and MedStar Health taking up much of the tenant roster.

JBG did not just snap up Georgetown Center and wave goodbye to ICG. The companies will be partners in the ownership of 1601 K St. The two-part ICG-JBG transaction, orchestrated by commercial real estate services firm Cassidy Turley on behalf of ICG, involved JBG’s recapitalization of the 80,000 square-foot office building. ICG had purchased the 55-year-old property in a partnership with Fidelity in 2002, and acquired its partner’s stake in 2004 in a $24 million recapitalization. Presently, occupancy at the eight-story 1601 K is 87 percent.

Metropolitan Washington, D.C., was second to New York in office transactions in 2010 with $4.3 billion in sales, according to a Cassidy Turley report. In the District, excluding Northern Virginia and suburban Maryland, the $2.6 billion in sales involved 22 transactions, marking a year-over-year increase of 80 percent. “After a strong 2010 for office sales, we expect this momentum to continue into 2011,” Cassidy Turley noted in the report.

And 2011 has not disappointed so far. Deals in the last few weeks alone include Wells Real Estate Investment Trust II’s agreement to buy the 679,700 square-foot Market Square complex for $615 million; Lincoln Property Co.’s $140 million purchase of the 279,000 square-foot 2300 N St., and CoStar Group Inc.’s disposition of its 169,500 square-foot headquarters at 1331 L St. in a $101 million sale-leaseback transaction. As per Cassidy Turley, “2011 will likely be a year in-line with the historical average of $5.4 billion in sales volume metro-wide.”