Washington REIT to Buy Watergate Building
- Mar 27, 2017
Washington, D.C.—No, not that Watergate building, but close. Washington REIT has agreed to acquire 600 New Hampshire Ave. NW, a 12-story, 309,000-square-foot Class A office building in Washington, D.C.’s, Watergate complex, for about $135 million, the REIT announced late last week.
The seller of the building, also known as Watergate 600, is Bradley Holdings, a/k/a Katherine Bradley and David Bradley, who also control Atlantic Media, publisher of Atlantic Monthly and other publications. Atlantic Media occupies 140,000 square feet, or nearly half of Watergate 600, under a long-term lease. Overall, the building is 97 percent leased.
And there’s a twist in the transaction: A portion of the consideration to be received by the seller will consist of operating partnership (OP) units.
“By partially structuring this acquisition as an OP unit transaction, we were able to execute a transaction that was mutually beneficial to both parties,” Paul McDermott, president & CEO of Washington REIT, said in a prepared statement. “The structure allowed us to create an efficient execution for a private owner of real estate in the Washington metropolitan area. Under a similar structure, we expect to generate opportunities to acquire additional properties and portfolios from longtime private-sector property owners.”
(Washington REIT noted that this building is not the one in which the infamous Watergate burglary was committed during the Nixon administration, in June 1972. That building is the nearby Watergate Office Building, 2600 Virginia Ave. NW.)
Overall, the Watergate complex, built on the Potomac riverfront between 1963 and 1972, consists of three buildings of cooperative apartments, the two office buildings and the Watergate Hotel.
600 Watergate underwent a major renovation in 1997, and a second renovation, Washington REIT said, will bring the building up to Class A status, with lobby and rooftop modernization, a new fitness facility, new conference center and systems upgrades. Commercial Property Executive has learned that the buyer expects to spend $15 million or somewhat more on the renovations, which are expected to be complete by the end of 2018.
That time frame, according to Washington REIT, will mesh well with law firm Blank Rome’s lease on about 90,000 square feet, which will expire at the end of 2018.
The acquisition is expected to close in early April.
Bradley Holdings bought Watergate 600 from LaSalle Investment Management in late 2003 for $108 million, according to information provided by Yardi Matrix.
Washington REIT noted that with the recent $125 million repositioning and 2016 re-opening of the Watergate Hotel, the complex “is experiencing renewed interest from both office and retail tenants.”