Court ruling clears way for Rosslyn redevelopment plans
A Lehman Brothers bankruptcy ruling last week means the family that built much of Rosslyn in the 1960s is primed to rebuild it 50 years later.
A U.S. Bankruptcy Court in New York on June 16 approved a $263 million equity investment by Lehman Brothers and developer Monday Properties, two companies that partnered to buy a 10-property portfolio in Rosslyn in 2007. The deal retires $239 million of debt that was due to mature in July.
Anthony Westreich, Monday Properties president and chief executive, said the partnership looked at borrowing from another party but decided that could eat into future returns in a market it considers strong.
"We saw the returns within the portfolio, and we saw the cash that's in the portfolio," he said. "We're obviously believers in the real estate, so we thought it made better sense for our partnership to realize those returns rather than to give it to a lender."
The Monday buildings, developed by Westreich's father, Stanley, in the 1960s and '70s, comprise about 3 million square feet, or about 30 percent of all Rosslyn office space. After control of the properties changed hands for about two years, Monday bought them back in 2007 with the help of two Lehman entities, Lehman Brothers Real Estate Partners and Lehman Brothers Holdings, only to see Lehman go bankrupt the following year.
Westreich said Lehman retained the real estate staff with which he had been working all along, which gave him confidence that Lehman could reinvest in the portfolio even though its actions required court approval.
"Lehman's mandate as it relates to their office real estate -- which is what I know about -- is to reinvest if they have belief in an asset or in a portfolio," Westreich said.
The ruling clears the way for Monday to pursue in earnest plans to tear down the aging buildings and erect high-end office and mixed-use properties aimed at drawing tenants from downtown D.C.
The developer already razed 1812 North Moore St. and plans to build what will arguably be the area's tallest building, a 35-story tower. Monday will tear down two buildings at 1401 Wilson Blvd. and 1400 Key Blvd. to make way for 1 million square feet of mixed-use development and similarly turn 1701 North Fort Myer Dr. and 1200 Wilson, less than 500,000 square feet today, into 1.3 million square feet.
Monday's willingness to reinvest in Rosslyn came as little surprise to another major office owner there, JBG. JBG is planning Central Place, which will bring dual office and residential towers next to the Metro station. Brian P. Coulter, chief development officer at JBG, said the Rosslyn-Ballston corridor is stable and difficult to penetrate and that as new retail, restaurants and attractions open, new offices will look even more attractive. "The amenities are arriving that frankly have not been there in the past," he said.
Much of the plans are contingent on Monday being able to attract office tenants, but Westreich said the lower operating costs, superior views and easy commute make the sell. His family's history doesn't hurt either; the Westreichs have connections to all of the more than 400 tenants Monday already has there, through either himself or his brother-in-law, Timothy Helmig, Monday's chief development officer.
"Every lease signed in our portfolio was negotiated and signed by either Tim or by myself," he said.