Readers of this blog dating back to its days on ML-Implode, may remember our exposé about former MBA CEO Jonathan Kempner’s misadventures at 1331 L St., NW, in Washington DC. The final chapter was written on Friday when…
…CoStar Group Inc., a provider of commercial real estate data, announced that it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. The price is far below the $79 million the trade group says it paid for the glass-walled building in 2007, while it was still under construction. The price also is far below the $75 million financing that the MBA received from a group of banks led by PNC Financial Services Group Inc. to finance the purchase.
The 48% loss is a bit worse than average for commercial estate, which has declined 43% from the peak according to the Moody’s/REAL commercial real estate index.
Kempner announced the plans for the new building near the top of the market in January 2007. It quickly proved an albatross. At the time we wrote about it in 2008, MBA hadn’t found any tenants to occupy the 60% of the building it wasn’t using. To date, they’ve filled just a sixth of that space according to the Wall Street Journal.
A few days after our story, Kempner said he would resign.
Though it must have been clear towards the end of 2007 that the building would prove a costly financial mistake, MBA still paid Kempner handsomely.
According to Forms 990 filed by MBA with the IRS, Kempner made $1.4 million in the year ending 9/30/08, down only $50k from the prior year and still $250k above what he made in fiscal 2006.
Just happen to be in DC today — yes, there is A LOT of snow — and 1331L was on my walk to work…
…still lots of space available for anyone interested.