DivcoWest, Jemal plan DC office-to-apartment conversion with $40m loan

DivcoWest and Jemal Real Estate Strategies plan to convert a 342,000-square-foot office building in Washington, D.C.'s West End into about 323 apartments.

Madison Realty Capital is providing a $40 million loan for the property's acquisition and predevelopment, the firms said.

The $40 million funds the purchase and predevelopment, leaving the larger construction check for the joint venture to arrange and price. Madison's recent loans have been larger: a $127 million take-out on Fort Lauderdale's Arcadian that closed Oct. 2, and, in September, a $77 million construction loan for a Whole Foods-anchored project outside Dallas.

The plan for 1255 23rd St. NW sets aside up to three dozen affordable units, about 11 percent of the total if all 36 are built. Across the 342,000-square-foot building, that works out to roughly 1,060 square feet per apartment.

The site sits between Georgetown, George Washington University and Dupont Circle, in an area with limited housing supply and access to employment centers, transit and retail. Norman Jemal, senior managing principal at Jemal Real Estate Strategies, said 1255 23rd St. NW "has the geometry and bones for a stunning residential building," and that adaptive reuse "will play an increasingly important role in the future of Washington's neighborhoods."