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Thursday, January 19, 2012

By Erika Morphy

Rock Creek Property Group to Redevelop Office, Multifamily

WASHINGTON, DC-Rock Creek Property Group has snagged two properties in the city out of foreclosure with plans to gut and rehab them.

One asset is a former charter school in the CBD, which the company plans to develop into an office building. The other is an apartment building, which the firm plans to renovate and then lease up to market rate rents. Both acquisitions were purchased out of the company’s Rock Creek Fund I Investors LLC, which is now about half deployed, Rock Creek partner Andy Glick tells “We are looking for more opportunities in the 2012 in the DC area, including other value-add opportunities and joint ventures.”

The charter school is located at 1100 16th St., NW. It is a four-story, 28,366-square-foot building, which Rock Creek acquired for $4.73 million, or approximately $167 per square foot, at a foreclosure auction from Tysons Corner-based Cardinal Bank. It plans to gut and redevelop the school into a single tenant office building. Rock Creek has retained DC-based OTJ Architects as the base-building architect and planner.

Construction of the base core and shell will begin in the first half of 2012, with delivery scheduled for later in the year.

The company is eyeing several possibilities for the property, Rock Creek partner Gary Schlager tells “We plan to convert it to an office building for a non-profit or trade association or embassy.” He said the company is in talks with a few embassies at the moment about the project. Rock Creek is willing to consider either a sale or a lease arrangement to a credit tenant. “We also have some groups talking to us about build-to-suit.”

Development costs haven’t been determined yet, he says, although a $1 million plus dollar range is the rough ballpark.

The other acquisition, which Rock Creek did with its joint venture partner BBP, was of Juniper Gardens, a 71-unit apartment community at 7700-7730 Eastern Ave., NW and 815-825 Juniper St., NW. It acquired the community for $4.1 million, or $57,746 per unit based on the existing apartment count. The property was purchased from Premier Bank, formerly DC-based Adams National Bank. It is tapping Reston-based Washington First Bank for the construction financing and has retained Bonstra Haresign Architects as the architect. Rock Creek expects to begin renovation in the first half of the year, with delivery scheduled for late 2012 or early 2013.

The property is currently 20% occupied and all the tenants are staying, Glick says—Rock Creek will renovate around them. Once the approximate $4.5 million renovation is complete, Rock Creek will rebrand and remarket the complex under the Juniper brand, he says.

Rents will be raised to market rates of between $1,400 to $1,600 a month for the one-and-two bedroom units, he says. UIP will handle its management when it is done. UIP is also serving as the general contractor.