MetLife, Norges Bank Buy D.C. Trophy Office Building in First Major Transaction of 2014

A month after announcing the birth of their joint venture, MetLife, Inc. and Norges Bank Investment Management (NBIM), a Norwegian pension fund manager, have made public the names of their second and third investments. One of the properties is located in downtown Washington, D.C. and is one of the city’s largest office buildings.

A month after announcing the birth of their joint venture, MetLife Inc. and Norges Bank Investment Management (NBIM), a Norwegian pension fund manager, have made public the names of their second and third investments. One of the properties is located in downtown Washington, D.C., and is one of the city’s largest office buildings.

The recently formed joint venture has acquired the Thurman Arnold Building at 555 12th St., N.W. According to the Washington Business Journal, it paid $505 million for the Class A trophy building to Toronto-based Manulife Financial Corp. in the first major commercial real estate sale of the year.

The property stands 12 stories tall and offers 782,000 square feet of space. It is located within walking distance of the Metro Center subway station and close to Macy’s, The Shops at National Place, the Willard Hotel & Office Complex, the JW Marriott and the Old Post Office Building. The freestanding office is also LEED Gold certified.

In a press release, the joint venture said the property was 85 percent leased at the time of the sale. However, Arnold & Porter LLP, the building’s anchor tenant, last year announced its plans to relocate to 601 Massachusetts Ave. in October 2015. The international law firm signed a 20-year lease for 375,000 square feet of space at the new location.

The joint venture also announced the acquisition of a 945,249-square-foot office building in San Francisco’s south financial district. “We are pleased to invest in these high-quality assets that should provide attractive returns over a long-term investment horizon,” said Robert Merck, global head of real estate investments for MetLife, in a statement for the press. “Our growing partnership with NBIM speaks to our strong capabilities in the asset management business.”

MetLife and NBIM formed the joint venture to invest collectively in Class A office properties in key U.S. markets. Last month, it invested in Boston’s One Financial Center (for coverage of this transaction by Commercial Property Executive, click here). After the acquisition of the three properties in Boston, San Francisco and Washington, D.C., the gross value of the joint venture is approximately $1.7 billion.

The acquisition of the Thurman Arnold Building shows that investors continue to be interested in the Washington, D.C., market. Recently, Jones Lang LaSalle Inc. reported that foreign investors account for 58.1 percent of the office building sales in D.C. in 2013. Historically, foreign buyers have accounted for 18.3 percent of transactions, while in 2012 they accounted for 30.7 percent of the office sales in the region.

Photo credits: CBRE