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Singapore Investor to Make Major Office Buys in D.C., Atlanta

Manulife US REIT Forges $387 Million Agreement for 1750 Pennsylvania Ave. and Phipps Tower
April 13, 2018
Pictured: Phipps Tower in Atlanta.

A Singapore REIT will enter Washington, D.C., and expand in Atlanta with the purchase of trophy office towers in both markets.

In a sign of Washington's ascent as a favorite real estate market for foreign money, Manulife US REIT said today it has agreed to acquire 1750 Pennsylvania Ave. NW, a 13-story, 277,243-square-foot office building in Washington. In February, the Association of Foreign Investors in Real Estate (AFIRE) said Washington jumped to No. 4 on its list of top cities among foreign investors. D.C. ranked No. 6 the year before.

Manulife US REIT will also buy Phipps Tower, a 20-story, 475,091-square-foot high-rise at 3438 Peachtree Rd. NE in Atlanta's Buckhead submarket. The aggregate purchase price will be $387 million, Manulife US REIT said.

The Phipps Tower purchase price of $205 million, or $431 per square foot, ranks as the second-largest office sale of the year in Atlanta. Developed by Manulife and Crescent Resources - now Crescent Communities - in 2010, Phipps is home to the headquarters of Carter's, the children's clothing company, and one of The CoStar Group' two office locations in Buckhead.

The transaction has some elements of an internal trade, as the seller is John Hancock Life Insurance Co., a subsidiary of Manufacturers Life Insurance Co. (Manulife) of Canada.

The 1750 Penn Ave. tower counts the U.S. Department of the Treasury as its largest tenant, at 121,424 square feet. The tower is located near the Treasury Department's headquarters at 1500 Pennsylvania Ave. Manulife US REIT will pay $182 million for 1750 Penn.

Jill Smith, CEO of Manulife US Real Estate Management Pte, Ltd., said 1750 Penn is the ideal spot for Manulife US REIT to plant its flag in the nation's capital. "This property sits strategically on the highly coveted Pennsylvania Avenue in Washington, D.C.'s preeminent commercial district," Smith said.

As for Phipps Plaza, Smith said its quality and location in Buckhead makes the tower an attractive addition to Manulife US REIT's portfolio. "Both properties met our investment criteria for acquiring trophy/Class A assets with long WALE (weighted average lease expiry) and high occupancies," she said.

1750 Penn tower's occupancy rate is 97.2 percent, and Phipps Tower is 97.3 percent full.

Tony Wilbert, Atlanta Market Reporter  CoStar Group   
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