Northern Virginia Offices Filled With Defense Contractors Sell For $220M
GI Partners acquired a handful of Northern Virginia buildings occupied by the biggest names in defense contracting as part of its strategy to add mission-critical facilities to its portfolio.
The San Francisco-based firm bought the five-building, 860K SF portfolio from a joint venture of Turnbridge Equities and Fundamental Advisors for $220M, the firms announced in separate press releases Wednesday.
The portfolio consists of a 273K SF property at 10302-10304 Eaton Place and a 184K SF building at 12450 Fair Lakes Circle, both in Fairfax; a 205K SF building at 460 Herndon Parkway in Herndon; a 113K SF building at 21700 Atlantic Blvd. in Sterling and an 85K SF building at 14700 Lee Road in Chantilly.
The portfolio is 96% leased, according to Turnbridge's release, with its tenants including Lockheed Martin, General Dynamics, Boeing and Northrup Grumman.
“The sale of the portfolio reflects the quality of the assets, tenancy and the vital nature of these properties to their respective tenants — demonstrated by our ability to renew tenants throughout the Covid pandemic without giving up a single square foot of leased area,” Turnbridge Managing Director Jason Davis said in a release.
Cushman & Wakefield's Eric Berkman, Shaun Weinberg and Kevin Sidney represented the seller, which assembled the portfolio in separate deals starting in 2018. Its strategy in combining the properties was to minimize risk by creating a multitenant portfolio with occupiers that provide critical defense and cybersecurity functions, according to the release.
These types of companies have helped put a spotlight on Northern Virginia as an attractive office market this year, with Raytheon and Boeing announcing plans to shift their headquarters to the region. But those wins were largely symbolic and didn't come with major footprint increases. Northern Virginia still suffers from a 20.9% office vacancy rate as of the second quarter, according to Newmark.
GI Partners, a firm with $35B in assets under management, acquired the portfolio through its Essential Tech Plus Science Fund, an investment vehicle that has acquired 13 properties since launching last year. The fund is spread across a variety of sectors including office, data centers and life sciences.
The buyer described this latest portfolio of buildings as "always on" properties, an asset class that houses mission-critical facilities and has been a part of GI's investment strategy for years. It said the buildings feature sensitive compartmented information facilities, or SCIFs, and a number of other highly secure features.
"The continual operation of these properties during the recent pandemic demonstrates the physical value of this real estate to the U.S.’s national intelligence and defense agencies," GI Partners John Sheputis said in a release.
