WASHINGTON, D.C. — AP AG Portfolio, LLC, a joint venture between AREA Property Partners and Adler Group, has closed on the first stage of a $350 million purchase of a 3,087,945-square-foot portfolio of multi-tenant office and warehouse assets in the Washington, D.C. market throughout Northern Virginia, Washington D.C. and Maryland. The portfolio will be acquired through a series of transactions culminating in the acquisition of 18 premier properties. This first recently closed stage sold in three separate transactions totaling $235.8 million, comprising 2,284,272 square feet (more than 2 million square feet of industrial space and two office buildings).
Washington Real Estate Investment Trust (“WRIT”) is selling the portfolio, which consists of industrial assets comprising the entirety of WRIT’s industrial division and some office properties. Current occupancy levels across all properties combined averages 79 percent. Paul Collins, Bill Collins, Drew Flood, Jud Ryan and James Cassidy of Cassidy Turley represented WRIT in the deal.
“We are bullish on the greater Washington, D.C. area, and confident that this high-quality portfolio will further flourish under the hands-on asset management skills we bring to the table,” said AREA partner Steve Wolf. Wolf also noted that AREA and Adler Group are now the second largest industrial property landlord in the Washington, D.C. market, and that the properties are well located and well suited for use by the sectors that dominate the region, such as government, intelligence, law enforcement and high-tech users.
The first sale transaction in this stage included 8880 Gorman Road, Alban Business Center, Dulles South IV, Fullerton Business Center, and Hampton Overlook. The second transaction included NVIP I and Pickett Industrial Park. The third transaction included 270 Technology Park, 8900 Telegraph Road, 9950 Business Parkway, Albemarle Point, Fullerton Industrial Center, Hampton South, and Sully Square, as well as the Albemarle Point and Crescent office buildings.
Albemarle Point, a 296,522-square-foot, two-story office property located in northern Virginia.
The final phase of transactions for the remaining 803,673 square feet include Northern Virginia Industrial Park II, which is expected to close on or about October 3, 2011, for approximately $44.5 million; and 6100 Columbia Park Road and Dulles Business Park, anticipated to transact on or about November 1, 2011, for approximately $69.7 million.
The comprehensive WRIT portfolio includes more than 230 tenants in 56 buildings across 18 properties in four submarkets, which are detailed below.** The properties combined are currently home to corporations including GE Healthcare, MedImmune, Raytheon, L-3 Communications, ITT Educational Services and American Honda Motor Company, along with bases of operations for numerous federal agencies. The average tenant size is 13,000 square feet, with the largest tenant occupying more than 140,700 square feet of industrial space.
8880 Gorman, a 140,700-square-foot property in Maryland, is fully leased to GE Healthcare.
“We are planning to add value for these assets by taking occupancy levels from the high 70 percentile above the 90 percent mark by focusing on concerted property improvement, marketing and management efforts,” said Matthew L. Adler, chief investment officer for Adler Group. He added that multi-tenant, management-intensive properties in markets with strong growth potential, such as the ones in the WRIT portfolio, are the type of assets for which the company can employ its expertise in on-site property management, leasing and tenant retention to provide strong value-added services and support that realize an asset’s fullest income-earning capacity.
This portfolio buy marks the latest collaboration between AREA and Adler Group, which have been joint venture partners since 1998 in the acquisition and operation of more than 8 million square feet of commercial real estate. “In past property partnerships with AREA we have deployed programs that have led to tenant retention well in excess of 70 percent, as well as new leasing programs that netted more than 1 million square feet per year,” noted Adler. “We are confident we can reach similar levels of success for these properties.”
— Dan Marcec
** Information courtesy of AREA Property Partners
