DWS sells Coral Gables’ The Alhambra for $120M amid its retreat from office

DWS Group sold a two-building office complex in Coral Gables for $119.6 million, amid the firm’s nationwide divestment from the asset class.

Dallas-based Lone Star Funds, Jay Caplin’s Miami-based Square2 Capital and David Moret’s Highline Real Estate Capital bought The Alhambra, consisting of the 14-story building at 2 Alhambra Plaza and the seven-story building at 95 Merrick Way, according to the buyers’ news release. Lone Star Funds is led by Donald Quintin and John Grayken. Square2 and Highline are based in Miami.

The buyers obtained a $98.5 million loan from an entity tied to Rialto Capital Management. The debt consists of DWS’ outstanding $58.3 million balance on its loan to a previous financier, which Rialto assumed, and an additional $40.2 million, according to records.

The deal comes amid a slow South Florida office market compared to the pandemic-induced boom fueled by an influx of out-of-state tenants and high valuations.

The 326,000-square-foot Alhambra is about 87 percent leased, the release says. The sale amounts to $367 per square foot.

The complex, completed in 1961 and 1987, spans a full city block. A Hyatt Regency Coral Gables Hotel sits between the two office buildings. The hotel wasn’t part of the sale.

Square2 Management will manage the property.

Hermen Rodriguez and Mathew McCormack were part of the JLL team that represented DWS. A JLL team also secured the financing on behalf of the buyers.

DWS, and its U.S. real estate subsidiary Rreef, have been shedding offices in recent years. It put The Alhambra on the market last summer with a target price of about $125 million.

DWS, led by Americas CEO Hepsen Uzcan and Todd Henderson as head of real estate for the Americas, paid $118.6 million for The Alhambra in 2015, according to property records and the firm’s website.

Henderson told The Real Deal last summer that Rreef made a policy decision to divest from its office portfolio nationwide even before the pandemic took a toll on occupancies.

In February, the firm sold two office properties in downtown Fort Lauderdale, also for minimal gains from what it paid for them. DWS sold Las Olas Centre I & II, consisting of an 18-story building at 350 East Las Olas Boulevard and a 15-story building at 450 East Las Olas Boulevard, for $208 million. Chicago-based Bradford Allen Investment Advisors was the buyer. DWS paid $204 million for Las Olas Centre in 2014, records show.

In the same week, Rreef Property Trust sold the 23-story Bank of America Plaza at Las Olas City Centre at 401 East Las Olas Boulevard for $221 million, also to Lone Star Funds’ real estate fund VII, Highline Real Estate Capital and Square2 Capital. Rreef paid $220 million for the property in 2016.

New-to-market firms are still leasing in South Florida, though fewer than the bonanza in the first three years of the pandemic. But office investment sales became scarcer amid higher interest rates and other elevated expenses such as insurance, widening bid-ask gaps and lowering property valuations.

Landlords divesting from offices nationwide are more likely to sell in South Florida, where they can still sell for at least breakeven prices or for smaller losses than what they would record elsewhere in the U.S., experts have told TRD.

Also in Coral Gables, AEW Capital Management sold the 11-story Ryder Colonnade office building at 169 Coral Way to Fort Worth, Texas-based Crescent Real Estate for $70.4 million last month. The deal marked a 13 percent discount from what AEW paid over a decade ago. A tougher capital markets environment opened the door to all-cash buyers who can avoid taking out financing. In last year’s top office deal, Spanish billionaire Amancio Ortega paid $274.4 million in cash for the 30-story Sabadell Financial Center in Miami’s Brickell.

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