WASHINGTON, D.C. — Paramount Group, Inc., a New York City-based real estate investment and management firm, has acquired 2099 Pennsylvania Avenue, a 206,573-square-foot office building in the heart of Washington, D.C. The building is located four blocks away from the U.S. Treasury and Federal executive office buildings and within walking distance from the White House.
The company acquired the 12-story trophy asset from Vico Capital, an Irish real estate partnership focused on acquiring core office properties. Prior to the sale, 2099 Pennsylvania was Vico’s lone American asset.
The terms of Vico’s disposition of 2099 Pennsylvania were not disclosed, but what is known is that the real estate investment firm purchased the property for approximately $172.5 million in 2008, according to its website. Back then, the purchase price of $867 per square foot eclipsed the previous record of $827 per square foot for Washington, D.C., office properties, according to Vico.
Although Vico isn’t based in the U.S., Paramount expressed there was minimal difference between the seller and similar domestic firms Paramount has negotiated with in the past.
“The seller was a sophisticated real estate investor with knowledge of the U.S. market and represented by a New York law firm,” Paramount Group said in a written statement released through Kathleen McMorrow of Rubenstein Associates. “Other than the time difference, there were not any differences transacting with a foreign entity as opposed to a U.S.-based entity.”
This acquisition marks Paramount’s fifth office property in the D.C. area, according to Albert Behler, president and CEO of Paramount. The company purchased the property through one of its six funds, Paramount Group Real Estate Fund IV. Since the funds were launched 6 years ago, Paramount’s acquisition department has completed approximately $11 billion worth of transactions.
According to Paramount’s website, the company’s primary geographic focus is on New York City, San Francisco and Washington, D.C. Paramount has decided to focus on the D.C. market because of its staying power, according to Behler.
“The Washington office market weathered the recent recession exceptionally well,” said Behler in a prepared statement. “(The property) is a perfect complement to the Class A properties that comprise our national portfolio.”
In the near term, 131,000 square feet of office space is due to roll over in the next 12 months, according to Behler. Additionally, Paramount plans to make capital improvements in pursuit of achieving LEED Gold certification, according to McMorrow’s statement from Paramount.
2099 Pennsylvania Avenue was constructed in 2001 and designed by Henry Cobb and Michael Bischoff, lead designers with PEI Cobb Freed & Partners, a New York City-based architectural firm. The property features a Tennessee marble lobby, rooftop terrace, fitness center and below-grade parking on-site.
The tenant list includes Perseus, a merchant bank and private equity fund management company, and Holland & Knight, a law firm.
— John Nelson