Washington REIT to acquire 309,000 s/f Watergate 600 office building for $135 million
Washington, DC — Washington REIT (Washington Real Estate Investment Trust has signed a contract to acquire 600 New Hampshire Ave., NW, a 309,000 s/f class A office building on the Potomac riverfront in Washington, DC, for $135 million ($437 per s/f).
Watergate 600, as it is known, is being sold by Katherine Bradley and David Bradley, who also control Atlantic Media. Atlantic Media occupies close to half of Watergate 600 (140,000 s/f) under a long-term lease. The Bradleys said: “After a dozen years as owners of Watergate 600 and as anchor tenants through Atlantic Media, we are delighted that the building will become part of Washington REIT. Their vision is consistent with ours, both for the iconic building and for the renewal of the surrounding complex. Washington REIT will be an excellent steward for a unique and treasured asset.”
A portion of the consideration to be received by the seller will consist of operating partnership units (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,” said Paul McDermott, president and CEO of Washington REIT. “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.”
Built in 1972 and renovated extensively in 1997, the 12-story, 309,387 s/f Watergate 600 is one of the six buildings that comprise the internationally recognized Watergate complex. Washington REIT’s latest acquisition enjoys a prominent site directly across from the Kennedy Center for the Performing Arts, with panoramic river views and instant access to Interstate 66. Metrorail’s Foggy Bottom station is located just about a quarter mile away.
“The acquisition of Watergate 600 exemplifies Washington REIT’s office strategy of acquiring high-quality, urban, metro-centric assets and further increases our footprint within prime locations in the District,” noted McDermott. “Following the company’s value-add success at 1775 Eye Street, which was acquired and renovated in 2014, 600 Watergate provides Washington REIT with another excellent opportunity to create value for our shareholders through effective repositioning and leasing.”
While the building is currently 97 percent leased, Washington REIT will have the opportunity to lease 90,000 s/f when Blank Rome’s lease expires at the end of the 2018. With the recent $125 million repositioning and 2016 re-opening of the Watergate Hotel, the Watergate complex is experiencing renewed interest from both office and retail tenants.
Based on this interest, Washington REIT plans to refine and complete the significant renovations underway including a lobby expansion and upgrade, major systems upgrades, and expansion of the building’s existing restaurant space to meet demand from Kennedy Center patrons. The new ownership also plans to add a state-of-the-art fitness facility and conference center, while expanding and upgrading the rooftop space.