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WRIT Acquires West End Office for $182M

WASHINGTON, DC-At $628 per sf, 2445 M St. is one of the higher office building trades in this submarket.

By Erika Morphy | Updated on June 18, 2008

WASHINGTON, DC-Washington Real Estate Investment Trust has entered into a purchase agreement to acquire 2445 M St. for $182 million, or $628 per sf. The company revealed the contract yesterday in an 8-K filing with the Securities and Exchange Commission. The transaction is expected to close no later than Q4 this year, once WRIT obtains lender consent for the assumption of a 5.62%, $102 million mortgage that has a maturity date of Jan. 2017, according to the filing.

A spokeswoman for WRIT described the pending sale to GlobeSt.com as a valuable addition to the company’s office portfolio. The firm is acquiring the nine-story, 290,233-sf, class A building from a private equity firm called Broadway Partners, she says. WRIT owns other office buildings close to its latest buy. It acquired 2000 M St. at the end of last year for $73.5 million. In March 2007 it acquired 2440 M. St, a class A, medical office building, for $50 million.

A RW Baird report analyzing the pending transaction estimates it will trade at an initial cash cap rate of 6.1% and a GAAP cap rate of 6.8%. If these numbers are accurate projections, the research note said, “they represent a modest increase over recent class A office transactions, which have remained sub 6%.” The fact that the seller is a private equity firm, Baird continued, is additional anecdotal evidence supporting its belief that the highly levered transactions from the past several years will unwind in the new credit environment giving REITs more opportunities to snap up high quality assets.

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