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AREA to buy DC portfolio

The New York-based real estate advisor and fund manager, in a joint venture with the Adler Group, will acquire a vast commercial portfolio in Washington DC for $350 million.

AREA Property Partners, in partnership with the Adler Group, has closed on the first stage of its $350 million purchase of a 3.1 million-square-foot portfolio of office and warehouse buildings in the Washington, DC market from Washington Real Estate Investment Trust (WRIT). AREA is acquiring the properties on behalf of an undisclosed fund.

The portfolio encompasses 18 properties, including all of WRIT’s industrial assets and two office properties, in four submarkets located in northern Virginia and Maryland. The first phase of the acquisition consisted of three transactions involving 15 of the properties, comprising nearly 2.3 million square feet of space and selling for a total of $235.8 million.

The remaining industrial assets are under contract and include the 570,452-square-foot Northern Virginia Industrial Park II, which is slated to close on or around October 3 for about $44.5 million, and 6100 Columbia Park Road and Dulles South IV, which total 233,221 square feet and are expected to close on or around 1 November for about $69.7 million.

The buildings, which have an average occupancy rate of 79 percent, are home to corporations such as GE Healthcare, MedImmune and Raytheon. “We will focus on increasing the occupancy rate and maintaining the credit-worthiness and quality of the tenant base to achieve the best results for our investors,” said Steve Wolf, a partner at AREA, in a statement.

“We are planning to add value for these assets by taking occupancy levels from the high 70 percent range to above the 90 percent mark by focusing on concerted property improvement, marketing and management efforts,” said Matthew Adler, chief investment officer of the eponymous Miami-based developer and operator.

AREA, which was founded in 1993 by real estate investor William Mack and Apollo Global Management under the name Apollo Real Estate Advisors, has invested approximately $13 billion in more than 550 transactions through multiple real estate funds and joint ventures. Since 1998, it has been a joint venture partner with Adler in acquiring and operating more than 8 million square feet of commercial real estate. With the acquisition of the WRIT portfolio, the partners will now be the second largest industrial landlord in the Washington DC market.