DWS Group has sold The Alhambra, a two-building office complex in Coral Gables, for $119.6 million as part of its ongoing strategy to reduce exposure to the office sector across the United States. The buyers are Lone Star Funds, based in Dallas and led by Donald Quintin and John Grayken; Miami-based Square2 Capital, headed by Jay Caplin; and Highline Real Estate Capital, led by David Moret.
The Alhambra includes a 14-story building at 2 Alhambra Plaza and a seven-story building at 95 Merrick Way. The combined property spans 326,000 square feet and is about 87 percent leased, according to information from the buyers. The purchase price equates to $367 per square foot.
To finance the acquisition, the buyers secured a $98.5 million loan from an entity associated with Rialto Capital Management. This financing package included Rialto’s assumption of DWS’ existing $58.3 million loan balance on the property and an additional $40.2 million in new debt.
The sale comes during a period of slower activity in South Florida’s office market compared to the rapid growth seen earlier in the pandemic when out-of-state tenants were driving high demand and valuations. While new firms continue to lease space in South Florida, investment sales have slowed due to higher interest rates, increased expenses such as insurance, and wider gaps between what sellers want and what buyers are willing to pay.
Square2 Management will oversee operations at The Alhambra moving forward.
JLL represented DWS in the transaction through Hermen Rodriguez and Mathew McCormack, while another JLL team arranged financing for the buyers.
DWS acquired The Alhambra for $118.6 million in 2015 but has since shifted its focus away from office assets nationwide—a decision made even before pandemic-related occupancy declines began affecting returns. “Rreef made a policy decision to divest from its office portfolio nationwide even before the pandemic took a toll on occupancies,” Todd Henderson told The Real Deal last summer.
Earlier this year, DWS also sold Las Olas Centre I & II in downtown Fort Lauderdale for $208 million after buying them for $204 million in 2014. In that same week, Rreef Property Trust sold Bank of America Plaza at Las Olas City Centre for $221 million—both properties went to some of the same investors involved with The Alhambra deal.
Industry experts note that landlords looking to exit office investments are more likely to find buyers or limit losses in South Florida than elsewhere because prices there remain relatively stable or allow sellers to break even.
In other recent Coral Gables transactions, AEW Capital Management sold Ryder Colonnade at 169 Coral Way for $70.4 million—a price roughly 13 percent below what it paid over ten years ago—demonstrating how cash-rich buyers can take advantage of tighter capital markets conditions. Last year’s largest local office deal saw Amancio Ortega acquire Sabadell Financial Center for $274.4 million in cash.
