Tuesday, October 11, 2005

History for sale

The building home to the biggest political scandal of the 20th Century was sold yesterday.

Office Building In Watergate Burglary SoldFirm Pays $86.5 Million, Foresees Modest Upgrades
By Dana HedgpethWashington Post Staff WriterTuesday, October 11, 2005; D01

The third Watergate building to change hands in the past few years has been sold -- this one the office building where the famous burglary occurred -- and the new owners say they will join efforts to improve the aging complex.

BentleyForbes LLC, a Los Angeles real estate company, said yesterday it paid $86.5 million to Trizec Properties Inc. of Chicago for the 11-story Watergate office and 61,000 square feet of retail space at 2600 Virginia Ave. NW.

Another part of the complex, the 251-room Watergate Hotel, was sold last year for $45 million and is expected to be closed in the spring and turned into luxury co-ops. The hotel and the newly sold office building are part of six Watergate buildings constructed in the 1960s and 1970s and designed by Italian architect Luigi Moretti. The complex sits next to the John F. Kennedy Center and overlooks the Potomac River.

The other buildings -- an office building at 600 New Hampshire Ave. NW and three residential buildings with 644 co-op units -- have undergone some improvements, and plans are to spruce up the Virginia Avenue building as well.

The New Hampshire Avenue office building was bought in 2001 by David G. Bradley, owner of the Atlantic Monthly and founder of the publicly traded Corporate Executive Board. He paid LaSalle Investment Management of Chicago $108 million for the almost 300,000-square-foot building, which has mostly law firms, medical offices and financial service groups as tenants.

After the Watergate Hotel was bought last year by Monument Realty LLC, the District developer faced major opposition from some residents of the neighboring co-ops over plans to turn the hotel into 104 co-op units. The plan, however, is proceeding.

"The Watergate is only looking up," said Drew Flood, a real estate broker for Cassidy & Pinkard involved in the deal for 2600 Virginia Ave. "You have a major facelift at the hotel. The views are excellent and your amenity base makes it a wonderful place to live and to have offices."

Trizec bought the office building at 2600 Virginia Ave. in 1998. It was the site of the 1972 break-in at the Democratic National Committee headquarters that eventually led to President Richard M. Nixon's resignation.

Trizec paid Chevy Chase-based JBG Cos. $50 million for the building, which has a mix of mostly smaller tenants, who pay between $28 and $40 a square foot. The retail includes a Safeway, a bakery and a high-end boutique.

"We think it's a unique asset with an interesting history and with a stable income in a unique location," said David W. Cobb, president and chief executive of BentleyForbes. "We're going to update the elevators, spruce it up. We're going to try to keep more of the original aesthetics but update it and make it a little bit nicer."

He said he hopes the improvements, which will cost less than $5 million, will permit the company to raise rents.

"It needs a facelift to have it be a Class A type building," Cobb said.

Cobb said his company, which was founded in 1993, owns about 8 million square feet of office space in 14 states, including Texas, California and Ohio. The company also owns a building in Columbia.

Trizec closed at $21.61 yesterday, down 48 cents, on the New York Stock Exchange.
(Source: Washington Post, Oct. 11, 2005)


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