WashREIT Agrees to Sell Office Portfolio for $766M, Shifts Focus to Multifamily Sector
WASHINGTON, D.C. — WashREIT (NYSE: WRE) has agreed to sell substantially all of its office portfolio to a Brookfield Asset Management private real estate fund for $766 million. The portfolio consists of 12 office assets spanning nearly 2.4 million square feet in metro Washington, D.C. The transaction is expected to close in the third quarter.
As of May 31, the office portfolio was approximately 83 percent occupied. Six of the properties are located in Northern Virginia — 515 King Street, Courthouse Square, 1600 Wilson Boulevard, Fairgate at Ballston, Arlington Tower and Silverline Center. The other six assets are located in Washington, D.C. They include 1901 Pennsylvania Avenue, 1220 19th Street, 2000 M Street, 1140 Connecticut Avenue, the Army Navy Building and 1775 Eye Street.
The sale coincides with WashREIT’s multi-year strategy of transforming into a multifamily REIT. The company has also signed a letter of intent to sell its remaining eight retail assets, and expects to complete that sale in the third quarter.
WashREIT says it plans to use the net proceeds from the sales to fund the expansion of its multifamily platform through acquisitions in Southeast markets and to reduce its leverage by repaying outstanding debt.
After the transaction is complete, WashREIT will only own one office asset. Watergate 600 is a Class A office building in Washington, D.C. spanning 295,000 square feet. The company says it intends to divest of Watergate 600 “when practicable.”
“We are announcing the most significant milestone to date in our transformation into a multifamily REIT,” says Paul McDermott, president and CEO of WashREIT. “This transaction, along with sourcing multifamily expansion opportunities and our retail sales process, signals our belief that the multifamily asset class is the best vehicle to harness long-term growth for our investors.”
WashREIT’s multifamily strategy targets the Class A-, Class B value-add and Class B segments. The company focuses on middle-income renters and markets poised for demand, such as Atlanta, Raleigh-Durham and Charlotte.
JLL served as the company’s exclusive real estate advisor in connection with the office and retail portfolio sales. Goldman Sachs & Co. LLC is serving as exclusive strategic financial advisor.
WashREIT’s stock price opened at $25 per share Wednesday, June 16, up from $23.70 per share one year ago. The company currently owns 6,863 apartment units across the D.C. metro area.
— Kristin Hiller