Federal Partners Closes on 400 KSF Northern Virginia Office Complex

By Barbra Murray, Contributing Editor 

Federal Partners, a co-investment joint venture with Spaulding & Slye Investments and the California State Teachers Retirement System, has added 400,000 square feet of suburban Washington, D.C. office space to its portfolio with the $101 million acquisition of Liberty Center, a three-building complex in Chantilly, Va. Duke Realty was the seller.

Located along Lee Rd., just across from the U.S. National Reconnaissance Office, Liberty Center meets Federal Partners’ criteria like a glove, with its 98-percent full tenant roster of federal contractors. The Class A property consists of the 80,000-square-foot Liberty Center I, built in 1998; the 159,000-square-foot Liberty Center 2, which made its debut in 2002; and the 164,000-square-foot Liberty Center 3, developed in 2006.

There’s something about Chantilly. Liberty Center marks Federal Partners’ second purchase in the city sited approximately 25 miles west of Washington, D.C. In 2011, the fund acquired Meadows I, a 104,000-square-foot office building that is fully leased to the U.S. Government through 2015.

Since its inception in 2004, Federal Partners has amassed a premier office portfolio totaling more than 2 million square feet, relying on commercial real estate services firm JLL’s Government Investor Services team to help identify properties with government leases that are likely to be renewed in place. The fund got an added boost in August when CalSTRS contributed an additional $150 million of equity into the fourth tranche. That cash infusion was followed by the purchase of the 188,000-square-foot office property at 4000 Metropolitan Drive in Orange, Calif.  For Federal Partners, it’s all about government and federal contractor- tenanted properties, and 4000 Metropolitan boasts the U.S. General Services Administration as an anchor under a long-term lease.

“While extremely pleased with our initial momentum out of the gate, we are far more enthusiastic about the inherent quality of the assets we’ve just acquired and how strongly they align with the Fund’s newly cast investment mandate,” Darryl Asack, managing director with Federal Partners, said in a prepared statement. “The selective inclusion of private sector contractors to our federal portfolio construction should provide enhanced return performance, as well as some relative reduction of risk within the strategy despite the obvious correlations. I’m encouraged by the strong start.”