D.C. Office Complex Trades for $356M

The two buildings at Waterfront Station, a 2.1 million-square-foot mixed-use project under development by Waterfront Associates L.L.C., total approximately 631,000 square feet.

June 9, 2011
By Barbra Murray, Contributing Editor

Totaling approximately 631,000 square feet, the office buildings carrying the addresses of 1100 and 1101 4th St. at Waterfront Station, a 2.1 million square-foot mixed-use project under development by Waterfront Associates L.L.C., have traded in a $356 million transaction. Waterfront Associates—a partnership between Forest City Washington and Vornado/Charles E. Smith—sold the fully-leased towers to USAA Real Estate Co. just one year after having completed them at a cost of approximately $245.9 million.

Development of the office structures kicked off in 2008 with the assistance of a $250 million non-recourse construction financing package provided by a consortium of banks that included Bank of New York Mellon, Bank of Ireland, Wachovia, PB Capital and Landesbank Baden-Wurttemberg, New York Branch.

In addition to Class A office space, all of which is occupied by various departments of the Government of the District of Columbia under a 15-year lease agreement, the 4th St. buildings feature ground-level retail space; combined, anchor tenant Safeway supermarket and CVS Pharmacy account for approximately 67,000 square feet of it.

USAA acquired the assets through its US Government Building Fund. The company is one of a hoard of investment entities from around the world that have been mining greater Washington, D.C., for properties in what is one of the strongest office markets in the country. Office investment sales reached $1.9 billion in the first quarter and are on track to exceed the $5.4 billion historical annual average, according to a report by commercial real estate services firm Cassidy & Turley, which orchestrated the sale of 1100 and 1101 4th on behalf of Waterfront Associates.