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ALEXANDRIA, VA-Washington Real Estate Investment Trust has acquired Courthouse Square, a five-story office and retail complex in historic Old Town Alexandria, for $17 million. The 113,000-sf building at 510 and 526 King St., is 98% leased to 28 tenants. The Rockville-based real estate investment trust often buys such multi-tenant buildings, but it had several other reasons for making the purchase, starting with a rent hike.

“The rents are significantly below market,” says Larry Finger, senior vice president and chief financial officer for WRIT. The average rent tenants are paying in the building is $21.83, but WRIT believes the average rent demand in the area is $25.91–an 18.7% increase just in base rent alone, Finger says.

WRIT expects the investment to produce a first-year cash return of 10.5%, and replace below-market leases on 31% of the building over the next two years. The building also lies across the street from another building WRIT owns at 515 King St. “We are oftentimes able to move tenants round like that,” he notes.

WRIT plans to spend about $750,000 renovating the common areas, roof, exterior, mechanical, security and safety systems. The seller was TrizecHahn of Toronto, which picked up the property earlier as part of a portfolio.

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