- The Washington Times - Wednesday, March 1, 2006

A Los Angeles real estate company that sells investors ownership interests in its properties plans to open an office in Washington this spring.

The company, SCI Real Estate Investments, is built around the concept of tenancies in common, which means the company’s rights in the commercial properties it buys are shared with investors.

Instead of dividends, investors receive monthly checks that represent a percentage of the rent paid by tenants. The value of their deeds rises and falls with the real estate market, similar to a time-share investment.

SCI investors typically earn a 6 percent to 7 percent return on their investments each year, as well as gain tax advantages from real estate ownership.

The tenancy-in-common industry received a big boost in 2002 when the Internal Revenue Service (IRS) revised its rules to make the arrangements easier for commercial real estate investments to use.

The market has grown fourfold since then and is likely to reach $10 billion this year, said Scott Lunine, SCI’s managing director.

SCI controls assets of about $1.2 billion, he said.

“Our goal is to acquire another $1 billion [in assets] this year,” Mr. Lunine said.

The company plans to buy as much as $250 million worth of Washington-area office properties this year. Mr. Lunine did not say which properties SCI might buy.

Mr. Lunine attended a conference of real estate companies at a downtown hotel yesterday to learn more about the outlook for the Washington area.

Like many real estate executives at the conference, Mr. Lunine said he thinks that Washington’s corporate office properties are likely to remain in high demand even while other markets cool off as interest rates rise.

“There are some markets that are more risk tolerant,” he said. “I think D.C. is one of them.”

Mitchell Schear, president of Charles E. Smith Commercial Realty, agreed.

“Washington, D.C., real estate is the place to be,” he said.

In other news

• Renovations have begun on a 300,000-square-foot office building at 1110 Vermont Ave. NW in Washington.

In addition to upgrades to the facade, building systems and interior spaces, the renovation will feature an interactive light installation by artist J. Meejin Yoon of Boston-based MY Studio. It will run along the lobby and sidewalk of the building’s east side.

Twenty steel “stalks” along the sidewalk will illuminate and emit sounds when touched. A wall of lights beside the facade will dim with pedestrians’ movements.

The $40 million renovation, being handled by Hitt Contracting Inc., is scheduled for completion in July. The building is owned by a partnership of Perseus Realty, General Motors Acceptance Corp. and the Stillman Group.

• First Potomac Realty Trust acquired Sterling Park Business Center for $30.87 million cash. The property comprises One Sterling Park and Two Sterling Park, which are two, one-story office buildings totaling 127,814 square feet and 42.5 acres of surrounding land.

Sterling Park Business Center is located in the Dulles Corridor adjacent to 403 Glenn Drive.

• The Anacostia Waterfront Corp. yesterday invited developers to propose plans to redevelop 47 acres of publicly owned land along the Anacostia Waterfront. The corporation wants the land to be used for a mixed-use, retail and residential development.

Property Lines runs on Thursdays. Call Tom Ramstack at 202/636-3180 or e-mail tramstack@washingtontimes.com.

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