Pennsylvania Avenue Mixed-Use Building Sells At Auction For $40M
An eight-story mixed-use building in D.C.'s West End was sold at a foreclosure auction Wednesday afternoon by lender New York Life Insurance Co. for $40M.
Principal Real Estate Investors had owned the property at 2401 Pennsylvania Ave. NW since 2014, when it purchased it for $75M with a $43M loan from New York Life Insurance Co. Built in 1991, the building contains about 40 apartment units, 20K SF of retail and 63K SF of office.
New York Life Insurance Co. filed a notice of foreclosure on the property in May before bringing it to a public auction hosted by Alex Cooper Auctioneers.
An entity named 7K 2401 LLC, represented by its lawyer, Earl Glock, was the winning bidder at the auction. The entity had purchased the note from the lender days before the auction, according to the D.C. recorder of deeds, for an undisclosed amount. The value of the note contributed to the entity’s bid, helping it win the auction.
A person familiar with the transaction tells Bisnow that the buyer is a family office.
The auction was held in upper Northwest D.C. near the Maryland border in a small room with a few dozen attendees.
After auctioneer Paul Cooper recited the legal documentation at a well-rehearsed clip, Glock started the bidding at $36M. The bid kicked off a back and forth between himself and Pantheon Capital Partners Managing Partner Stephen Masciola, with Cooper escalating the price in $250K increments.
When Glock bid $39M and Cooper asked if there was a taker for $39.25M, Glock outbid himself and went to $40M.
At that point, Masciola asked for a sidebar with his associate. When they came back, Masciola stopped bidding and Cooper called the sale for Glock.
“This was a very interesting asset at a pretty good price,” Masciola told Bisnow following the auction.
He said his firm is interested in acquiring distressed real estate and would have planned to convert the property’s office space into residential and continued to operate it.
“It has a lot of deferred maintenance, probably $10M in the next 10 years, but we were prepared for that,” he said.
Of the building’s 63K SF of office, 42K SF is available, across the first four floors, according to Avison Young’s property listing. That includes the fully available, 19K SF second floor.
D.C.'s office market is dealing with a record-high vacancy rate of more than 20%, and other buildings have faced distressed situations in recent months as owners struggle to pay back debt.
The Pennsylvania Avenue building has office tenants including Latimer Neurology Center, Avenue Title Group and communications firm West End Strategy Team, according to their websites. Its retail tenants include Orangetheory Fitness, restaurant Marcel’s by Robert Wiedmaier and MOXee Salon & Spa.
CORRECTION, JULY 27, 3:25 P.M. ET: A previous version of this story incorrectly stated the address of the Pennsylvania Avenue building. This story has been updated.
