Debt, Uncertainty Prompt Humongous Gallery Place Discount

A Washington, D.C. megacomplex home to sports, retail and entertainment is facing a sale at a mere fraction of its assessed value.

A joint venture headed by MRP Realty and Global Fund Investments is set to acquire Gallery Place at 616 H Street NW in the city’s Chinatown neighborhood for $39 million, according to court documents reported by the Washington Business Journal. MRP emerged as the likely buyer of the shopping center in March, but no price was revealed at the time.

The 660,000-square-foot property includes 260,000 square feet of retail space, 228,000 square feet of office space and nearly 200 condominiums, which aren’t part of the looming sale. Two anchor tenants — Bed, Bath & Beyond and Urban Outfitters — left in recent years, leaving a Regal Cinemas movie theater as the lone remaining anchor.

As of February, the office space was 86 percent vacant, while the retail space was 42 percent vacant, according to court documents.

Still, the city assessed Gallery Place’s two parcels — excluding the condos — at $225.7 million for this year. That means MRP is coming in at just 17 percent of the assessed value.

Timing was everything for MRP, which submitted its bid for the property while Monument Sports & Entertainment were threatening to move the Washington Capitals and Washington Wizards out of Chinatown and to Northern Virginia.

That no longer appears to be happening, and Washington, D.C. has pledged $515 million to renovate Capital One Arena and the surrounding area; Monument is taking 200,000 square feet at Gallery Place as part of the agreement and other tenants may follow as the arena situation resolves.

MRP was also able to slide in after the owner, an affiliate of Oxford Properties, defaulted on the $179 million loan backing the seven-story property. Gallery Place has been in receivership since last year’s default.

A superior court judge approved the $39 million sale last month. While the deal was supposed to close within 15 days of the judgment, it likely won’t be finalized for another couple of weeks.

— Holden Walter-Warner