DWS Group has sold The Alhambra, a two-building office complex in Coral Gables, for $119.6 million as part of its ongoing effort to reduce office holdings across the country. The buyers are Lone Star Funds, based in Dallas and led by Donald Quintin and John Grayken; Miami-based Square2 Capital, led by Jay Caplin; and Highline Real Estate Capital, headed by David Moret.
The purchase includes a 14-story building at 2 Alhambra Plaza and a seven-story building at 95 Merrick Way. The group secured a $98.5 million loan from an entity connected to Rialto Capital Management. This financing includes DWS’ outstanding $58.3 million balance on its previous loan—which Rialto assumed—and an additional $40.2 million.
The sale comes as South Florida’s office market slows after the surge during the pandemic that brought many out-of-state tenants and higher property values. According to the release, The Alhambra is about 87 percent leased, with the sale price equating to roughly $367 per square foot.
Built in 1961 and 1987, the complex spans a full city block in Coral Gables. A Hyatt Regency hotel sits between the two buildings but was not included in this transaction. Square2 Management will take over management of the property.
JLL represented DWS in the sale, with Hermen Rodriguez and Mathew McCormack involved from their team. JLL also arranged financing for the buyers.
DWS has been divesting office properties for several years through its U.S. real estate subsidiary Rreef. Last summer it listed The Alhambra with an asking price near $125 million—close to what it paid for the property in 2015 ($118.6 million), according to company records.
Todd Henderson, head of real estate for DWS Americas, previously told The Real Deal that Rreef decided to sell off offices nationwide even before pandemic-related occupancy declines: “Rreef made a policy decision to divest from its office portfolio nationwide even before the pandemic took a toll on occupancies.”
Earlier this year, DWS sold Las Olas Centre I & II—two downtown Fort Lauderdale office towers—for $208 million after purchasing them for $204 million in 2014. In another transaction that week, Rreef Property Trust sold Bank of America Plaza at Las Olas City Centre for $221 million; it had acquired that property for $220 million in 2016.
While some firms new to South Florida continue leasing space there—though less frequently than during earlier pandemic years—investment sales have declined due to higher interest rates and rising expenses like insurance costs, which have widened bid-ask spreads and reduced valuations.
Experts have noted that landlords looking to exit office investments are more likely to find breakeven or smaller losses selling properties in South Florida compared with other U.S. markets (https://therealdeal.com/miami/2023/10/11/investors-who-bought-office-in-the-pandemic-are-getting-squeezed).
Last month in Coral Gables, AEW Capital Management sold Ryder Colonnade—a nearby office building—for $70.4 million at a loss compared with its prior purchase price over ten years ago. Tougher capital conditions have benefited all-cash buyers who do not need financing (https://therealdeal.com/miami/2023/12/21/crescent-real-estate-pays-70m-for-coral-gables-office-tower). In another major deal last year, Spanish billionaire Amancio Ortega paid cash for Sabadell Financial Center at Brickell ($274.4 million).
Henderson summarized DWS’ approach: “Rreef made a policy decision to divest from its office portfolio nationwide even before the pandemic took a toll on occupancies.”
