Douglas Secures Hecht's Warehouse at Auction

With Patriot Equities having defaulted on more than $44 million for its property known as "Hecht's Warehouse", noteholder Douglas Development picked up title to the property this afternoon as the sole bidder of the auction it held through Alex Cooper Auctioneers. Douglas gained control of the title with an unrivaled bid of $20 million (a hair above the "outstanding debt in excess of $19,999,000") for the entirety of the four-parcel property spanning New York Avenue in Northeast: 1401-1403, 1545 New York Avenue NE, and 2001 16th Street, NE. Meaning, Douglas is no longer the noteholder, but the property owner, and potential developer, of the site.

The City Paper reported last week that Douglas Development had bought the promissory note for the Hecht's Warehouse property from U.S. Bank in March of this year, after Penn.-based Patriot Equities was unable to keep up with a $66 million loan, and the Bank nearly went into foreclosure last year.

Patriot Equities had purchased the Hecht's Warehouse property in 2007 for $78 million and planned a development called Patriot Yards, a warehouse facility that boasted "loading accessibility which is virtually unmatched in the District." At the time of purchase, Abdo was thrilled to have future development in the Northeast neighborhood, with the hopes it would encourage investors for its own 17-acre Arbor Place project, which never happened, nor has development of New York Avenue taken hold.

As reported by the Post on Monday, Norman Jemal of Douglas asserted that his company "is considering a warehouse distribution space at the site or possibly apartments with streetfront retail."

Washington D.C. real estate development news

A House Goes Missing in Northeast

It’s not uncommon to revisit a place from the past, in hopes of a stroll down memory lane, and find instead that favorite haunts have turned over, and familiar buildings have been torn down. It is less common, however, to visit your home and find it torn down. This is what happened to Rafat Azzam and his property at 1053 44th Street, NE, in the Deanwood neighborhood of Washington, D.C. Azzam bought the property from CitiMortage Inc. on April 29th, 2010 for $32,000 (plus additional settlement costs near $1000). It was razed in early October of 2010 by Rightway Development Inc., a Virginia- based construction, demolition and development services company, which was hired by property-management company, Safeguard Properties LLC, a Delaware LLC, which was hired by CitiMortage Inc. 

Prior to Azzam’s purchase, previous owners defaulted on their mortgage and on October 17th, 2008, and CitiMortage purchased the property on April 7th, 2009 at a public auction run by Alex Cooper Auctioneers, with a bid of $256,122.12. According to the D.C. Recorder of Deeds, Azzam's purchase on April 29, 2010 was “filed out of order,” on August 19th, 2010. The deed was refiled and processed on December 27th, 2010. Between this time – August and December – the house was razed. Rightway Development had applied for a raze permit a year earlier, in October of 2009, and the permit was issued by the D.C. Permit Operations Division on August 20th, 2010 – a day after the original "misfiled" deed. Rightway razed the property less than two months after obtaining a permit, in early October of 2010. Azzam visited his property on October 21st, 2010 when he was “shocked” to find it missing; in its place a chain link fence bearing Rightway Development signage. Azzam moved to D.C. from Egypt in order to pursue a degree in Mechanical Engineering, and had sold his property in Egypt “for approximately four percent of its value” in order to buy a house in D.C. to live in while he completed his education, as states the legal document filed with the Superior Court of the District of Columbia on February 22nd, 2011. Azzam maintains that he was waiting on permits to renovate the house before moving in. He also claims to have had $15,000 to $20,000 in personal property in the house at the time it was razed. Azzam is suing Rightway Development, Safeguard Properties, and CitiMortage for $1.3 million in damages and personal property compensation. 

Washington D.C. commercial real estate news

McCaffery and Douglas Pick Up Chinatown Corner Site

The last undeveloped corner in one of the most high-traffic areas of Washington has just been acquired by McCaffery Interests Inc. and Douglas Development, at 675 H Street N.W., encompassing the iconic corner building, long since boarded up, and the vacant lot behind it.

"This is the best intersection in metro D.C." said Juan Cameron, Managing Director of McCaffery, comparing it to Georgetown's Wisconsin Avenue and M Street hub. "It is a central location with a lot of pulse, narrow streets, tons of foot traffic, a heavy daytime population, tremendous residential presence, plus the energy of the Verizon Center. In our eyes, its the closest thing Washington has to Times Square."

Though "everyone has their ideas for how the property will take shape," said Cameron, in these early stages the venture is dubbed as a state of the art, mixed use development. "Step one is looking for a marquee tenant," said Cameron.

General partners for the venture Douglas Development and McCaffery Interests acquired the property yesterday at auction. The property had gone into foreclosure thirty days ago, after Yeni Wong of Riverdale International had been unable to secure financing for the building. This past month was the last of many times the building had fallen into foreclosure; in 2009, Wong was given a notice for this property as well as 801 7th Street for $13,491,471 plus attorney's fees. Wong bought the two properties in 2006 for $10 million dollars.

This isn't the just the first or second try at developing this corner. DRI, a Transwestern Company, had slated 675 H Street as a two-building project: one that would restore the corner space and rise nine stories over the arch, the other a Class A office building behind the main storefronts. The total project would have yielded 110,000 s.f. of office space and 50,000 s.f. of retail. McCaffrey owns Georgetown Centre, leased by Barnes & Noble, and Mazza Gallery, which it bought in 1997. Douglas owns pretty much everything else.

Update: Alex Cooper Auctioneers states that the lot was purchased for $9.1 million.

Vacant Properties on the Chopping Block Wednesday

Tomorrow, DC's Department of Housing and Community Development will shed itself of 18 vacant, government-owned properties at a public auction. The single-family townhouses, multi-family buildings and vacant lots cover neighborhoods in almost every Ward, but take note: not everyone is welcome to bid. Buyers can include only prospective home owners that will occupy the property, non-profits and Certified Business Enterprises (CBE) registered with the District. Buyers must bring a $15,000 deposit to participate in the bidding.

There may be deals in waiting (for the buyer, not for the District taxpayer), given the restrictive qualifications on purchasers. Buyers looking to get in on the Shaw transition can bid on 1713 New Jersey Avenue, NW (pictured), which tax records show sold for just under $300,000 in 2005. Neighboring properties have sold for as much as $750,000 in recent years. A lot at 805 7th Street, NE, near H Street, zoned for residential use, could command some interest given the District Council's recent approval of overhead wires for the future streetcar. Though a buyer could snag a bargain, the buy-in and then the required 10 percent deposit within three days time could be a bit of a deterrent for the do-it-yourself buyer.

The District auctions the properties in the hopes of returning them to the tax roll, creating additional revenue and removing blight. The vacant properties were acquired through negotiated friendly sale, eminent domain, donation, and tax sale foreclosure when owners were "unwilling or unable to maintain their properties." The auction, run by Alex Cooper Auctioneers, will take place at the Walter E. Washington Convention Center tomorrow beginning "promptly" at 2 PM.

Washington, DC real estate development news

Senate Square to be Auctioned

The 432-unit Senate Square apartment building on the 200 block of I Street, NE is headed to auction on February 23rd. Senate Square was developed by New York-based Broadway Development Company and designed by architect Philip Esocoff. The property went into receivership in October 2009.

The two 12-story towers began sales as condos in September of 2005, but in 2007 converted to apartments when only 150 units went under contract. Since that time, the developer had fallen behind on mortgage payments to lender Goldman Sachs, and last October, California- based Douglas P. Wilson Companies was appointed as Receiver for Senate Square, requiring them to act as the developer on behalf of the court. On December 11, 2009, Goldman Sachs sold the note to Westbrook of New York. According to a representative of the Receiver, the project is currently 85% leased, more than 2 years after offering the building for lease, and that the new ownership is not likely to affect management or operation of Senate Square as an apartment building.

Senate Square was cleaved off from Abdo Development's Landmark Lofts condo project, which purchased site of the former Children's Museum for development; the two share a central amenities building. The auction will be held at 10am, February 23rd, at the auction house of Alex Cooper.

Washington, DC real estate development news