Foreclosure Looms as Post Brothers Pursues D.C. Conversion Projects
The Philadelphia-based real estate firm Post Brothers, known for transforming office buildings into residential spaces, is facing financial challenges regarding one of its significant projects in Washington, D.C. The company has been issued a foreclosure notice for the property located at 2100 M Street NW, a substantial 301,000-square-foot structure situated in the city’s West End, close to George Washington University.
Details of the Foreclosure Notice
Reported by The Business Journals, a foreclosure auction has been scheduled for April 10. Matt Pestronk, co-founder and president of Post Brothers, expressed optimism about resolving the issue while emphasizing the potential of the D.C. multifamily rental market. “Washington, D.C., is the best multifamily rental market in the country, and we are long-term bulls on the market,” he stated.
Financial Backdrop of the Property
In early 2023, Post Brothers acquired 2100 M Street NW for $66.8 million from previous owners Network Realty Partners and Meadow Partners. This purchase price represents a significant discount compared to the $92.5 million that was paid in 2019. The acquisition was financed by a loan of approximately $66.7 million from AllianceBernstein; however, the outstanding debt now totals $77.9 million, with the loan’s maturity occurring several months ago.
Conversion Plans for 2100 M Street NW
Post Brothers has ambitious plans for this property, aiming to convert it into 400 apartment units by adding five stories and a penthouse. Additionally, the proposal includes incorporating 20,000 square feet of retail space at the ground level. The site has historical significance, having previously served as the headquarters for the Urban Institute until its move to a new location at 500 L’Enfant Plaza.
Approval and Future Prospects
While the D.C. Board of Zoning Adjustment granted approval for these conversion plans in October, there are concerns about whether Post Brothers can retain control of the property long enough to execute their vision. Pestronk acknowledged the challenges in the current office market, stating, “The office market [in D.C.] doesn’t yet have a lot of investors chasing every opportunity. But if someone can spend less [by keeping an office building as is] and get the same return, they’re probably going to do that.”
Ongoing Residential Development Initiatives
In the midst of these challenges, Post Brothers is simultaneously working on a major project involving the conversion of a two-building plaza at 1825 and 1875 Connecticut Avenue NW. This endeavor, named Universal North and South, is set to yield approximately 600 residential units and is recognized as the largest office-to-residential transformation currently underway in the District. This project also benefits from D.C.’s 20-year office-to-residential tax abatement under the Housing in Downtown program initiated by Mayor Muriel Bowser.
Conclusion
The unfolding situation surrounding Post Brothers and the 2100 M Street NW property highlights the complexities of the current commercial real estate landscape. As the firm navigates these challenges, its future in Washington, D.C., remains crucial, particularly given the ongoing demand for residential spaces in urban centers.
For more insights, contact Nick Trombola.
