Princeton Holdings, Bluestone JV Acquire National Office Portfolio

Manhattan real estate investment firms Princeton Holdings and the Bluestone Group have closed on the first phase of a large national office portfolio acquisition with the purchase of four buildings.
1433 West Loop South-Houston

1433 West Loop South-Houston

Manhattan real estate investment firms Princeton Holdings and the Bluestone Group have closed on the first phase of a large national office portfolio acquisition with the purchase of four buildings – one each in Washington, D.C., Houston, San Diego and Sacramento, Calif. – for approximately $250 million.

The four office buildings, which have a total of 850,000 square feet and are leased primarily to the General Services Administration, are part of a 14-property portfolio the joint venture is acquiring from an UrbanAmerican partnership that is liquiding its remaining assets.

Information on when the entire deal will be completed was not available. A release from Princeton Holdings and Bluestone described it as a “complex, larger multi-property financing.”

One of the properties in the first tranche is 999 E. St. NW in Washington, D.C., a 175,000-square-foot building in the East End submarket near Capitol Hill and the Verizon Center sports and entertainment complex. The other acquired assets are: 1433 West Loop South, a 138,000-square-foot office building in Houston; 8808-8810 Rio San Diego Drive, a two-building office complex in San Diego, and 1325 J St., a 358,407-square-foot office building in downtown Sacramento.

“These locations are also very attractive to non-government tenants and that provides additional upside for us and our partners since private-sector tenants will likely pay higher rents when these government leases expire,” Eli Tabak, co-founder of Bluestone, a privately held real estate investment firm, stated in the release.

Princeton Holdings and Bluestone noted that the Washington, D.C., property is a “prime candidate for redevelopment” because it is located across from the E. Street side of the FBI headquarters, which is slated to become one of the largest redevelopment sites in the city. The new owners of 999 E. St. NW said a major lease is expiring in 2017 so the building could soon be vacant, a plus for redevelopment. The joint venture said it would consider selling or recapitalizing that asset.

The properties in San Diego, Sacramento and Houston all have long-term leases which will provide strong cash flow, the JV partners said.

“This transaction truly embodies what Princeton does best: rationalizing complex transactions to produce value for our partners and investors,” Joseph Tabak, chairman & CEO of Princeton Holdings, said in the release.

Princeton Holdings acquires and redevelops properties on its own or with third-party investors. It also provides capital to other real estate investors and developers through joint-venture equity, preferred equity and subordinate debt.

Like Bluestone, Princeton Holdings focuses on opportunistic and value-add commercial real estate investing. Known mostly for its New York projects and assets, Princeton Holdings has been active in other markets but this large portfolio transaction signals the firm is “now fully in the early stages of a major national growth phase,” the release stated.

Since its founding in 2006, Bluestone has closed more than $750 million in real estate transactions. It has been very active in acquiring under-managed properties, developing markets and purchasing non/sub-performing debt.