CoStar Group sees nearly 150% return on sale of DC headquarters
CoStar Group, a commercial real estate analytics and marketing firm, sold the building that houses its Washington, D.C., headquarters this week for $101 million, which is a 146% gain on the price the firm paid for it. GLL L-Street 1331, an affiliate of Munich-based GLL Real Estate Partners, bought the 2-year-old building with cash in a deal expected to close later this month. CoStar with more than 1,000 employees will still occupy the majority of 1331 L St. after the sale is complete. The firm will put $15 million in escrow to fund additions and improvements to its space and the common areas of the building. CoStar acquired the property from the Mortgage Bankers Association one year ago this week for about $41 million, or $243 a square foot. The purchase price was one of the lowest paid on a per-square-foot basis for a new office building in Washington, D.C., in more than a decade. CoStar received a nearly 150% return on investment with the sale. Andrew Florance, CoStar founder and chief executive officer, said the sale enables his company to unlock the value of the formerly distressed property. "The opportunistic acquisition of this building for our headquarters office was part of our larger strategy to create value through our occupancy of the building," Florance said, adding that the firm anticipates 700 new jobs at the D.C. location. CoStar said the building sale and leaseback does not affect the company's fourth quarter of 2010 or full year 2010 earnings. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.