- The Washington Times - Thursday, July 1, 2004

One of the nation’s largest real-estate investment firms is making an impression on the District again.

Wells Real Estate Investment Trust II Inc., an Atlanta real-estate fund with more than $5.5 billion in assets, paid Crow Holdings about $105 million for 80 M St. SE, a 275,000-square-foot office building near the Navy Yard Metro station.

It is one of the largest office purchases this year and in keeping with the fund’s reputation for paying big bucks for top-notch, fully leased buildings in the Washington area.

Wells REIT II, as it is commonly called, made a splash in the District in 2002 by paying $345 million for the 950,000-square-foot Independence Square I and II in Southwest. The acquisition of the complex housing the National Aeronautics and Space Administration and the Office of the Comptroller of the Currency was the largest in the District in 2002. But on a square-foot basis, the 80 M St. purchases were more expensive.

Wells officials said they were lured to 80 M St. because it is located in an area targeted for redevelopment by D.C. planners. Construction started last year on the new U.S. Department of Transportation headquarters on M Street between Second and Fourth streets SE, and developer Forest City plans to build housing and retail on the surrounding land.

Meanwhile, the District is working to make the whole area more accessible for pedestrians and to bring development closer to the Anacostia River waterfront.

“You have to go where the growth is going to occur,” said David Steinwedell, chief investment officer of Wells Real Estate Investment Funds, which controls the Wells REIT II. “We think the plans that are in place are going to bode well for the whole area. Returns will grow as that area gets more popular.”

D.C. officials said they were pleasantly surprised by the building’s sale price, and saw it as an endorsement of the city’s redevelopment plans.

“There are buildings in the middle of town not going for that much. It’s a reflection of what it’s going to be worth in a few years,” said Chris Bender, spokesman for the Office of the Deputy Mayor for Planning and Economic Development. “It’s a validation of the planning we’re doing. People are now willing to put dollars where the talk is.”

Wells officials also said they were willing to pay a high price for the building because it is 100 percent leased by some of the most stable, credit-worthy tenants out there. Defense contractors BAE Systems and Northrop Grumman occupy about 40 percent of the building. The average remaining lease for all tenants is about seven years, and some have options to extend for an additional five.

“Wells is really a long-term investor in real estate,” said Ben Johnson, Wells’ director of real-estate marketing.

In other news…

• CarrAmerica paid Westwind Capital $131.2 million for Commonwealth Tower, a 345,000-square-foot office building at 1300 Wilson Blvd. in Rosslyn. It is one of the largest office-building sales of the year and was brokered by Cushman and Wakefield.

• Turner Associates signed a three-year, 35,700-square-foot lease at Beaumeade Corporate Park in Ashburn, Va. Kayser Commercial helped broker the lease with Turner and the landlord, Trizec Properties.

• Property Lines runs Fridays. Tim Lemke can be reached at tlemke@washingtontimes.com or 202/636-4836.

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