Manulife US REIT buys Pennsylvania Avenue property for $238.72m

It also bought the Phipps tower in Atlanta for $268.89m.

Manulife US REIT bought 1750 Pennsylvania Avenue in Washington, D.C. (Penn) and Phipps Tower in Buckhead, Atlanta (Phipps) for a total price of $507.69m (US$387m), it said in an announcement.

The Penn was bought for $238.72m (US$182m). About 97.2% of it is occupied, and tenants include the US Department of Treasury and the UN Foundation, which occupy 80% of the net leasable area (NLA) and have leases expiring in 2022 and 2028. The property is a 13-storey Class A office building totalling 277,243 sqft that is a block away from the White House and near the International Monetary Fund, the World Bank, and the US Fed.

Meanwhile, Phipps was bought for $268.89m (US$205m). About 97.3% is leased, and its tenants include OshKosh B’gosh designer Carter’s which has a 15-year lease expiring in 2030 and some other finance, consulting, and information firms.

The acquisition fee will be paid in the form of Manulife US REIT units and a mix of debt and securities.

Manulife US REIT said it aims to acquire prime properties which offer diversification in terms of trade sector and tenant base, “in order to enhance the resilience of Manulife US REIT’s portfolio. The acquisitions will increase exposure to key trade sectors of public administration and grant giving.”

The REIT added that the leases in Penn and Phipps are long-tenured, with over 90% of the leases by NLA expiring in 2022 and beyond. The current weighted average lease expiry (WALE) by NLA for Penn and Phipps are 6.8 years and 10 years respectively.

In Penn, 47.4% of the leases by NLA have annual escalations in the range of 2% to 3%, whilst in Phipps, 99% of the leases by NLA have either annual escalations in the range of 2% to 3% or periodic escalations which are equivalent to approximately 1.3% escalations annually over the course of the lease.

The purchase price represents a discount of 1.3% to Cushman & Wakefield’s total appraised and a discount of 2.3% to Colliers’ total appraised value.

“Assuming the acquisitions were completed on 1 January 2017 and the REIT held and operated both Penn and Phipps in 2017, the pro forma DPU of Manulife US REIT would increase by 1.4% to approximately 5.85 US cents, compared to the FY2017 DPU of 5.77 US cents,” the REIT said.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia