$172.5 million

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That is why this trade is taking on a sort of symbolicimportance to nervous building owners and worried brokers: not onlydid a trophy building sell at a good price in a relatively shortperiod of time--four months--but at $867 per sf, it was the highestrecorded price in the market. According to John Kevill, managingdirector at Jones Lang LaSalle, the nearest trade was $825 per sf,registered a few years ago, when 1801 PennsylvaniaAve. was sold.

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Kevill, along with Collin Ege, represented the seller,Germany-based Wealth Management Capital Holding GmbH in thetransaction. The building was originally developed by a JV betweenKaempfer and Real Estate Capital Partners in 2001. That year it wassold to Wealth Management. Debra and Benjamin Lacy of Lacy Ltd.advised Wealth Capital in this transaction as well as its purchaseof the building seven years ago.

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According Kevill, the seller is basing the per sf sales price ona building measurement that comes out to 199,000-sf. The buyer,according to its announcement two days ago, is using a 206,000-sfmeasurement, which translates into a lower price per sf. Eitherway, though, it is still the highest price paid in the market.

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The ongoing demand for DC trophy space, a weak dollar and highforeign interest in DC real estate all account for the building'sprice, Kevill tells GlobeSt.com. Jones Lang LaSalle did not go tomarket with an asking price; rather it used the leverage generatedby the auction process to develop the price that the buyerultimately paid. "We had interest from literally around the world,"Kevill says. "The real story is not that Vico Capital paid what itdid; it is the fact that there was a group of buyers willing to paythe same thing."

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Kevill says he and his colleagues went on marketing tours inEurope, the Middle East, Asia Pacific and Latin America. It camedown to two buyers: Vico and a high-net worth individual in theMiddle East. The cap rate paid for the building was in the sub 5%range, according to Kevill--a rate that is equivalent to those of ayear ago.

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The main attractant for Vico was the expected cash returns itwill receive as rents in the building turn over. The property iscurrently fully leased to three tenants: Holland and Knight;Perseus, a merchant bank and private equity fund managementcompany; and Danaher Corp. "The buyer is focused on current incomeand future income," Kevill says. If space were to become availablein the building, asking rates would be in the mid $50s, triple net,he predicts.

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Kevill explains that trophy buildings like 2099 Pennsylvania'come to market onceevery few years. Meanwhile, though, the demand to lease such spacein the city continues to grow. "There is a tenant class in DC thathas to be in the best possible space—government affairs offices forforeign countries, global law firms etc."

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Another factor behind the trade is the weak dollar, which makessuch investments more attractive to foreign buyers. "This wasprobably the first transaction I have been involved in where thebuyer took some comfort in the relative weakness of the dollar—thatalso impacted the underwriting to a degree," Kevill says.

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