Penzance has purchased the Watergate office building at 2600 Virginia Avenue, Washingotn DC, from BentleyForbes, a Los Angeles-based commercial real estate investment company. The company declined to disclose a purchase price, but according to New York-based market research firm Real Capital Analytics, the building was acquired for $76 million in deal that completed this month.
“The Watergate Office Building represents a very exciting value-add investment opportunity on a number of different fronts,” said Thomas J. Ikeler managing director of capital markets at Penzance, adding that the firm will be undertaking a significant interior upgrade of the property. The building currently has about 80,000 square feet of contiguous vacant office space on its top two floors.
The 12-story, 200,000-square-foot office and retail property, which fronts the Potomac River, was constructed in 1967 as one of six buildings comprising the 10-acre Watergate complex, the first mixed-use development in the city. Just five years later, in June 1972, five men were arrested for burglary and for wire-tapping the headquarters of the Democratic National Committee, then located on the building’s sixth floor. The incident, which helped to expose a broader campaign of political spying, sabotage and cover-up by the administration of President Richard Nixon, ultimately led to the unprecedented resignation of Nixon in August 1974.
While best known for the political scandal that bears its name, the Watergate building has also been the subject of legal troubles in recent years. In 2005, BentleyForbes, in a joint venture with Chicago-based real estate investment firm Capri Capital Partners, purchased the property from Trizec Properties (now part of Brookfield Office Properties) for $86.5 million. But the partnership unravelled, with Capri suing BentleyForbes in December 2009 for the controlling interest in the property. In its suit, Capri alleged that BentleyForbes violated the partnership agreement by failing to make payments to the Capri Select Income II fund, which had invested more than $14 million in the building.
The transaction marks the third time that BentleyForbes has put the property up for sale, after failing to find a buyer in 2008 and 2009.
BentleyForbes could not be immediately reached. Capri and Eastdil Secured, which brokered the transaction, declined to comment.