WASHINGTON, DC—A source tells GlobeSt.com that the Milken Foundation was the lucky bidder to win the much-coveted Pennsylvania Ave., NW, assets that Cornerstone Real Estate Advisers put on the market recently. The Santa Monica, Calif.-based non-profit paid $55.5 million for the connected properties located a stone's throw away from the White House.
You know the buildings even if you can't rattle off the specific addresses. One is 1501 Pennsylvania Ave., NW -- the one-story, 5,000-square foot building with beautifully ornate interior that was built in 1902 and still serves as a Bank of America branch. At one time, due to its location across the street from the US Treasury, it was featured on the $10 bill.
The other is 730 15th St., NW, a 10-story, 112,000-square foot office building connected to 1501 Pennsylvania Ave. Also leased to Bank of America, it too has had a cameo in American history as it houses the famed Treaty Room.
The two properties total 117,000 square feet.
Cushman & Wakefield's Eric Berkman and Steven Gichner brokered the transaction on behalf of Cornerstone Real Estate Advisors, which had been holding the properties on its own books.
Bank of America has sold off these as well as several other branches in one of its many portfolio sales over the years. This particular group went into foreclosure, which is how it came to Cornerstone. The assets were cross-collateralized and it took some time for Cornerstone to separate them for sale.
When they finally did go to market, potential buyers from all over the world rushed forward to bid. The buildings weren't exactly a stellar investment from a bottom line perspective, despite the unbeatable location -- according to the marketing materials, neither building will be cash-flowing for the new owner for some time, due to Bank of America's pre-paid lease.
Yet high-net worth individuals from around the world wanted the assets, much like a collector would want a rare antiquity or gem, Berkman told GlobeSt.com. One or two pension funds made inquiries, but the bulk of the bidders were a veritable who's who listing of the world's richest individuals, he said.
"These are one-of-a-kind assets. They are part of history and the views of the White House and Pennsylvania Ave. cannot be matched."
The bidders "wanted to own them for their intrinsic worth and they made very aggressive offers," he said.
As the winning bidder, the Milken Foundation finds itself in a most unique position: it owns the only two private buildings on the portion of Pennsylvania Ave. that is facing the White House. In 2014 it acquired the adjacent building, the then-vacant PNC Bank building. This year, it announced plans to turn the building into a museum to celebrate educators -- a rare focus for a museum even in DC, which is home to a slew of all kinds of collections, from the Smithsonian's expanse on the National Mall to the tiny National Capital Trolley Museum in Silver Spring, MD.
One can't help but wonder what the Milken Foundation may have in mind for its newly-acquired neighboring property -- two buildings that are already coming to the table with their own historical significance.
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