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DLJ seeks to sell off seven Tysons office buildings

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By Jonathan O'Connell
Monday, November 1, 2010

The largest land portfolio in Tysons Corner may soon get significantly smaller. The new owner of 115 acres of Tysons Corner property is looking to sell seven of the office buildings it recently purchased, a possible prelude to its own development plans for the area.

DLJ Real Estate Capital Partners, a subsidiary of the financial services firm Credit Suisse Group, purchased the Tysons real estate portfolio of WestGroup in July, including more than a dozen existing office buildings located south of the Dulles Toll Road and straddling the Beltway.

As part of the purchase, DLJ created a development subsidiary, Cityline Partners, with the capability of transforming the collection of office parks and roads into a walkable, urban area in concert with construction of Metro's new Silver Line that will connect Tysons with the District.

But not all the properties are prime for development in the near future, so less than three months after the purchase, Cityline enlisted the brokerage firm Grubb & Ellis and issued a prospectus for seven buildings on a total of 39.2 acres to possible buyers. The seven buildings are all named after Virginia counties -- Amherst, Brunswick, Culpeper, Dickenson, Gloucester, Lancaster and Northampton -- and in all comprise 730,000 square feet of offices.

Cityline is led by a number of former WestGroup developers and executives. Among them is Thomas Fleury, who has been developing property in Tysons since the 1970s, including 34 years with WestGroup and a stint with the Pennrose Group. They declined to discuss their plans.

"Due to confidentiality issues and the fact that it is a highly competitive sales process, we are not willing to discuss the sale at this critical junction of the process," Fleury said in an e-mail.

The broker, Eric Berkman, said the buildings were well-leased and that most had been renovated, making them attractive to buyers looking to own office properties for rental income rather than develop them.

"These are good, quality office buildings," he said.

The deadline for bids was last week, and Berkman said he expected to know more details on the sale next month.

With Cityline planning to seek zoning changes in accordance with Fairfax County's new plan for Tysons Corner later this year or early in 2011, developers and attorneys speculated that the company was looking to raise money for its development plans, which will require major infrastructure changes.

"My guess is that they are trying to get some of their capital back by selling some of the properties," said Mark C. Looney, a partner in the real estate practice at the law firm Cooley.

Before the sale of most of its Tysons portfolio to DLJ, WestGroup also sold a handful of buildings that were largely occupied. It began by selling two buildings on Westpark Drive in January and June. On June 25 it announced the sale of 8100 Jones Branch Dr. in McLean, headquarters of Freddie Mac, to StonebridgeCarras and Walton Street Capital. Shortly thereafter, WestGroup sold the Rappahannock Building, at 1550 West Branch Dr., to Corporate Office Properties Trust, a real estate investment trust based in Columbia.


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