This Week's D.C. Deal Sheet: BXP 'Isn't Going Anywhere' At Met Square
One of D.C.'s largest office buildings was handed back to its lender this week, as Artemis Real Estate Partners took control of the majority stake in Metropolitan Square from Blackstone. But minority partner and property manager Boston Properties is sticking around and pouring millions back into the building.
"Boston Properties isn't going anywhere," Boston Properties Executive Vice President and D.C. region co-Head Jake Stroman told Bisnow Friday. "We’re investing capital on a go-forward basis. We still manage and lease the property, and there’s fairly significant leasing momentum that exists today."
Blackstone and Boston Properties, which previously owned 80% and 20% of the asset, respectively, handed the building back to Artemis, which had been their mezzanine lender. The deal, first reported by the Washington Business Journal, was structured as a deed-in-lieu-of-foreclosure transaction.
Stroman confirmed that Artemis took control of the asset, which sits one block from the White House, but he said BXP has formed a new partnership with Artemis that will invest up to $100M to stabilize the asset, with BXP contributing 20% of that.
“We effectively wrote this investment off last year and continue to actively manage our portfolio to deliver the best possible investment outcomes based on evolving market conditions," a Blackstone spokesperson wrote in an emailed statement to Bisnow.
The 12-story, 657K SF office building was 58% leased at the end of Q2, according to BXP's financial supplement for investors. It lost WeWork as a tenant at the end of last year. The embattled coworking provider had once occupied 226K SF across four floors, its biggest location in the District.
FINANCING
MRP Realty and its partners have secured financing and begun construction on a 212-unit affordable housing building that represents the second phase of Northwest One, the redevelopment of a public housing complex on North Capitol Street.
MRP's development team, which also includes CSG Urban Partners and Taylor Adams Associates, secured $37.8M in Low-Income Housing Tax Credit equity arranged by Berkadia, the brokerage firm announced Thursday.
It also received $23.7M from the D.C. Housing Finance Agency in tax-exempt bonds that were acquired by JPMorgan Chase, and it landed a $38M loan from D.C. through the Office of the Deputy Mayor for Planning and Economic Development, which selected the development team for the site, MRP principal Matt Robinson told Bisnow.
The second phase, which has started construction, will be fully affordable to households earning between 30% and 60% of the area median income, and its unit sizes range up to four bedrooms. It also has 11 units set aside for tenants who were previously homeless. It comes after the completion of the 220-unit first phase, which landed financing and broke ground in 2020.
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Enterprise Community Development closed a $74M deal to finance the renovation of Silver Spring's 141-unit Park Montgomery Apartments and the addition of 76 new affordable apartments on a nearby site, Commercial Observer reported. It secured a senior mortgage from Bellwether Enterprise, and it received LIHTC financing and additional funding from Maryland and Montgomery County.
SALES
JBG Smith sold the Falkland Chase Apartments, a 438-unit community spanning three properties in Silver Spring, in separate transactions totaling $95M, the Washington Business Journal reported. The property at 1545 North Falkand Lane sold for $36.5M to the Arlington Partnership for Affordable Housing, which plans to redevelop it. The other two properties, 1600 East West Highway and 8305 North Falkand Lane, sold to a partnership of the Washington Housing Initiative Impact Pool, Enterprise Community Partners and Bank of America, according to the WBJ.
LEASES
The Securities and Exchange Commission signed a lease extension for up to five years for its headquarters at the Station Place complex, Bisnow first reported Wednesday. The lease totals roughly 1.1M SF across the Station Place I and II buildings, while it gave back around 210K SF at Station Place III. The extension comes as plans to build a new headquarters for the SEC in NoMa have stalled, with developers Douglas Development Corp. and Midtown Equities struggling to secure financing.
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Grosvenor landed an 18,500 SF office lease at 1701 Pennsylvania Ave. NW with the Center for a New American Security. The firm is moving from Carr Properties' 1152 15th St. NW and is taking the entire seventh floor of the Golden Triangle building. Cushman & Wakefield's Michael Katcher, Theo Slagle and John Skolnik represented the landlord and the tenant in the deal.
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Across the street at 1700 Pennsylvania Ave. NW, the White House Historical Association signed a 32K SF lease to open a new museum, visitor center and gift shop, the Washington Business Journal reported. The building, one block from the White House, is owned by an affiliate of the Klock family, which submitted zoning plans for an adjustment to accommodate the museum.
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The Alzheimer’s Association signed a 5,800 SF office lease at Wheelock Street Capital's National Gateway II in Potomac Yard. It is relocating from 8180 Greensboro Drive in Tysons. The building at 3550 South Clark St. in Arlington was renovated last year with a new conference center, tenant lounge, outdoor courtyard and upgraded lobby. Lincoln Property Co.'s Doug McLearn and Correll Caulfield represented the landlord, and Tenant Service Group's Caleb Bush represented the tenant.
