by Jonathan Berke - The Deal.com

- September 25, 2001 - San Francisco real estate investor Doug Shorenstein is expected to announce Sept. 26 that he has purchased the prestigious Washington Harbour complex in the nation's capital for roughly $150 million from Richard Rainwater's Crescent Real Estate Equities Co.

That purchase price represents a discount of roughly 7.3% to the $161 million that Crescent paid for the complex back in 1998.

A unique two-building complex, the Washington Harbour is located on the shores of the Potomac River in Georgetown. The Shorenstein Co. will pay for the complex with money from its fifth real estate fund. The building will be the last to be added to that fund's portfolio, because Shorenstein just recently closed its sixth fund, worth $600 million, on Aug. 29.

For Shorenstein, the deal marks his first entry into a very strong Washington, D.C., office market, which most real estate pundits feel will be able to survive in the aftermath of the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon.

"Rates continue to be quite high in Georgetown and throughout the downtown market, despite the economic downturn and the disaster," said John Kyle, senior managing director of the District of Columbia offices of real estate brokerage firm, Julian J. Studley Inc.

Kyle estimated that rents in trophy buildings in Georgetown such as Washington Harbour still go from anywhere from $40 to $60 per square foot.

Shorenstein had been looking at the Washington office market for quite some time and previously found it to be relatively expensive. But now, he said, it's "fairly priced."

"It fits into our portfolio - a Class A office building in a strong market that has deep tenant appeal," said Shorenstein, who is best known for being a part-owner in San Francisco's Bank of America Center complex. Crescent had acquired the landmark Washington Harbour from Long-Term Credit Bank of Japan in 1998 and interest has reportedly soared in the last two years.

A Commercial Mortgage Alert story in August, 2000, reported that Oliver Carr Jr., founder of CarrAmerica Realty Corp., was interested in making a $167 million offer, but that never materialized. Sources close to the situation said that CarrAmerica Realty itself, as a minority investor in a partnership, might have taken a look at the property.

The 12-year old Washington Harbour - located at 3000 and 3050 K Street - was designed by legendary architect Arthur Cotton Moore, whose firm more recently completed an extensive renovation of the Library of Congress. Washington Harbour contains 536,500 square feet of space and is 100% leased mostly to law firms, including Orrick Herrington & Sutcliffe llp. Brokering the property for Crescent is Eastdil Realty llc, the real estate advisory branch of Wells Fargo & Co.