WashREIT Agrees to Sell Eight Retail Assets, Increases Focus on Multifamily Sector

by Alex Tostado

WASHINGTON, D.C. — WashREIT (NYSE: WRE) has agreed to sell five of its retail properties for $485 million, plus an additional three power centers, as part of a strategic move to increase its investment in the multifamily sector. The buyers are two undisclosed institutional investors.

The first sale agreement includes five retail properties totaling 800,000 square feet. Those assets include Gateway Overlook in Columbia, Md.; Wheaton Park in Wheaton, Md.; Olney Village Center in Olney, Md.; and Bradlee Shopping Center and Shoppes of Foxchase in Alexandria, Va.

The second transaction includes three Maryland properties spanning 850,000 square feet. The properties are Centre at Hagerstown in Hagerstown, and Frederick Crossing and Frederick County Square in Frederick. WashREIT said it will disclose the sales price of the second transaction after the deal’s closure, which is expected to occur in late July.

Simultaneously, WashREIT has agreed to acquire an urban-infill, value-add multifamily community for $70 million. Details about the property were not disclosed at this time.

Earlier this year, WashREIT announced that it would acquire a portfolio of seven multifamily properties in the Washington, D.C. area for $461 million, thereby increasing its multifamily portfolio from 28 percent to 45 percent based on net operating income (NOI). As a result of the sale of the eight retail assets, WashREIT’s retail portfolio will be reduced from 22 percent to 6 percent based on NOI.

“By year’s end, we expect to have significantly de-risked and strengthened our cash flows and recycled approximately 75 percent of the large capital gains embedded in our retail portfolio,” says Paul T. McDermott, president and CEO of WashREIT.

In a conference call earlier this spring during which the company announced its earnings for the first quarter of 2019, McDermott made the following remark regarding the company’s strategy: “Ultimately, I would like to see more than half of our portfolio be in the multifamily space.”

WashREIT has also closed on the previously announced $33 million sale of Quantico Corporate Center, a two-building office complex in Stafford, Va. Office properties make up 49 percent of WashREIT’s portfolio based on NOI.

The company’s stock price closed Wednesday at $26.38 per share, down from $29.80 per share one year ago.

As of June 26, the company’s portfolio of 51 properties included more than 5.8 million square feet of commercial space and 5,953 multifamily units in the Washington, D.C. market. According to the Washington Business Journal, 77 percent of WashREIT’s apartment units are located in Northern Virginia, a majority of which are within a five-mile radius of Amazon’s planned HQ2.

— Alex Tostado

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