VEF acquires DC office for $170m

Apollo affiliate VEF Advisors is acquiring a Washington DC office building near the new National baseball stadium.

Atlanta-based VEF Advisors and Monday Properties have acquired an office building in Southwest Washington DC for around $170 million (€130 million). The investment came out of the firm’s Value Enhancement Fund VI, its latest value-add vehicle.

The Transpoint Building, as it is known, is comprised of 600,000 square feet of space and is currently being used by the US Coast Guard. It is located in the Southwest area of the city, close to the new Washington National Baseball Stadium. The seller was reportedly CDC Mortgage Capital, which acquired the building in 2004 for $90.5 million.

Always a hot office market, Washington still seems to provide investors with strong fundamentals. In addition to increased interest in the SW neighborhood because of the arrival of the Nationals, vacancies in the downtown Washington office sector remain low.

According to a report released in October by brokerage firm Richard Ellis, Washington remains one of the tightest office markets in the US, with the lowest vacancy rate of any downtown behind Charlotte, Midtown Manhattan and Honolulu.

Still, according to the report, supply might be catching up with demand. In the third quarter of 2006, vacancy rates increased by 60 basis points, one of the largest increases in the country.

Last November, VEF acquired 311 West Monroe, an office building in Chicago’s West Loop, for $43 million from JBC Acquisition & Development Fund I, a vehicle controlled by the John Buck Company. The 14-story, 390,000 square foot building was the initial investment from Value Enhancement Fund VI.

VEF is partly funded by New York private equity real estate firm Apollo Real Estate Investors and was wholly owned by Lend Lease in the late 1990s. VEF’s value enhancement fund series was launched in 1993 and pursues a value-added strategy.