Joint Venture Buys Capitol Riverfront Office Building

Houston-based Lionstone Investments and London-based Hermes Real Estate have recently purchased a Class A office building in the District’s Capitol Riverfront submarket, for an undisclosed price. This is the $250 million joint venture’s first investment.

Houston-based Lionstone Investments and London-based Hermes Real Estate recently purchased a Class A office building in the District’s Capitol Riverfront submarket for an undisclosed price. It marked the $250 million joint venture’s first investment.

The 12-story office building opened in 2008. It was developed by Opus East, a company that filed for bankruptcy in 2009. Northwood Investors, the previous owner, purchased the property at a foreclosure sale for $57 million.

The building is located at 100 M St., S.E., two blocks from Nationals Park. It offers 243,000 square feet of space, including more than 12,000 square feet of ground-floor retail and a four-level underground parking garage with 196 parking spaces. According to the new owners, 100 M St. was approximately 80 percent leased at the time of the sale. Tenants include Parson, Regus, Dutko Grayling and Gordon Biersch.

Eastdil Secured represented Northwood Investors in the transaction and arranged acquisition financing. Monument Realty advised on the acquisition. It will also provide property management and leasing services for the property.

“100 M St. is one of the best office buildings in the Capitol Riverfront, a transformational neighborhood that has a concentration of some of Washington’s most attractive natural and man-made amenities,” Glenn Lowenstein, Lionstone co-founder & CIO, said in a statement. “These amenities, in combination with excellent accessibility via Metro and existing roadways, positions Capitol Riverfront to become an established, high-demand submarket within the next several years.” The Lionstone Hermes Real Estate Venture was formed to invest primarily in office properties in high-growth U.S. markets.

In its third-quarter market report for Greater Washington, D.C., Marcus & Millichap said that the area’s office market continues to attract investors in spite of the relatively high vacancy. In the 12-month period ending in the third quarter, deal flow jumped 17 percent, with sales increasing most significantly for properties in the District’s downtown, Greater Fairfax and Alexandria/I-395 area. Marcus & Millichap also said that buyers paid an average price of $328 per square foot during the same period.

Photo credit: Northwood Investors
Charts courtesy of Marcus & Millichap.