As part of the deal, the JV assumed a total of $23.5 million in existing debt on the buildings. The portfolio includes: the Equitable Building at 10 N. Calvert St., the Keyser Building at 207 E. Redwood, the Maryland Trust Building at 16 Calvert St., the facility at 301 N. Charles St., the Title Building at 102-110 St. Paul St., Brown's Arcade at 322-328 N. Charles St., the Katz Building at 111 N. Charles St. and Cathedral Place at 300 Cathedral St..

Naing--who also heads up real estate services firm CB Richard Ellis' Washington, DC Private Client Group--believes the joint venture's purchase is timely in that the tide is about to change; investors who have had their eyes glued to Washington, DC, he says, will soon turn their attention to Baltimore.

"Baltimore is an undiscovered secret, and that's what made this deal so attractive," Naing tells GlobeSt.com. "Baltimore has something Washington, DC doesn't have--affordability. Baltimore is always one-third less than DC." With regard to class A office properties that figure edges closer to one half; according to Delta Associates' Third Quarter 2004 Report for the Washington/Baltimore office market, the asking rate in the District is $42.20, while the rate in Baltimore is $24.80.

Naing continues, pointing out the circumstances that are bound to lead to a renewed interest in the city. Looking back, he explains that there had been a glut of office properties in Baltimore and a slew of developers snapped up many of these buildings at low prices and then converted them to residential properties to accommodate the growing demand for rental and condominium facilities.

"These developers were taking the supply away from the office glut, but eventually, the glut disappears and the occupancy will increase and rents will go up. I've been seeing this trend over the last six months before we tied up the deal," he says.

Even when looking at the last nine months, indeed, the numbers show a decline. At the end of the third quarter, the overall vacancy rate among office buildings in the central business district was 12.3%, down from 13% at the end of 2003. Essentially, the joint venture may very well be getting in on the ground floor of what could ultimately be another red-hot, Washington, DC-like market. The JV plans to help things along at the Boxer Portfolio, increasing occupancy and eliminating turnover through a substantial renovation project that will cost "several million dollars."

Instant Insights /

$30M Buys Historic Eight-Property Boxer Portfolio

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