REITS Drive Activity in DC Suburbs

SILVER SPRING, MD-In recent days two REITs—one local, one headquartered in Pennsylvania—have acquired office properties in the DC area’s close-in suburbs for a total of $172.85 million in separate transaction. Radnor, PA-based Brandywine Realty Trust has entered into an agreement to buy three office buildings here for $120.6 million. Also, Washington Real Estate Investment Trust has paid $52.25 million in cash for the Fairgate at Ballston.

Brandywine is acquiring the office portfolio, called Station Square, via its Brandywine-AI joint venture. The seller is a joint venture between Urdang's Value-Added Fund II and Moore & Associates.

The properties, located in the heart of Silver Spring’s CDB, total 499,395 square feet, which brings the purchase price to $241 per square foot. The JV secured $66.5 million of non-recourse property financing with a maturity date of July 2019 and an interest rate of 3.22% to fund the transaction. 

Brandywine hopes to make additional office acquisitions in the DC market through this JV, Gerard H. Sweeney, president and CEO of Brandywine Realty Trust, says in a prepared statement. These buildings will likely be located near transit be inside the Capital Beltway, he says. Brandywine-AI is a 50-50 venture between the REIT and Current Creek Investments, a subsidiary of Allstate Insurance Co.

The 147,000-square foot Fairgate at Ballston is another centrally located asset in a close-in DC suburb, albeit in Virginia’s submarket of the Rosslyn-Ballston Corridor. The eight-story office building, located at 1005 N. Glebe Rd., is 82% leased to a diverse mix of office tenants. WRIT funded the acquisition through its line of credit. The seller was not identified; according to published reports, Boston-based TA Associates Realty bought the property from TIAA-CREF for $51 million in 2006.