D.C. developer to acquire Gallery Place, clearing way for Monumental entrance

Gallery Place, the economically troubled mixed-use property adjacent to Capital One Arena, will be sold to a prominent D.C. developer with plans to turn at least part of the building over to D.C. and Monumental Sports & Entertainment.

Pending approval by the D.C. Superior Court, MRP Realty will gain control over Gallery Place through a quick-close receiver sale, confirmed multiple sources familiar with the deal. MRP was the highest bidder for the property, which has been under receivership since last May. The deal, which would not include the Residences at Gallery Place, is expected to close in May or June.

The exact amount of MRP’s bid is unclear, as are any terms of a side deal between MRP and the District. MRP officials declined to comment. The District "cannot comment on pending transactions," a D.C. government spokesperson said.

According to the latest receivership report filed with the Superior Court earlier this month, the secured debt on Gallery Place was $179 million, and property was valued on the books at $327 million.?

Sources say MRP had lined up the proposed sale well before Mayor Muriel Bowser and Monumental CEO Ted Leonsis on Wednesday announced their agreement to keep his teams in Washington. But once the handshake deal collapsed to move Monumental to a new $2 billion sports and entertainment district in Alexandria’s Potomac Yard, the stars aligned.

Under the terms of the deal signed Wednesday, pending expected D.C. Council approval next week, the District will send $515 million over three years to finance Capital One Arena’s modernization. In addition, the agreement provides for 200,000 square feet “of newly programmed space throughout Capital One Arena and in the Gallery Place building next door.” The terms also call for a new downtown practice facility for the Wizards, with “options including top floors of Gallery Place,” per Monumental’s release.

For more information on Monumental's decision and its impacts:

• Monumental's reversal keeps focus on plans to revitalize downtown
• The Bowser-Leonsis presser: 30 minutes of atonement, triumph and I told you so
• Leonsis, Bowser agree to terms on deal to keep Caps, Wizards in D.C.
• Alexandria ends negotiations for Wizards, Caps arena at Potomac Yard
• JBG Smith releases unusually blunt statement on collapse of arena deal

Gallery Place has been under receivership since May 31, 2023, when the Superior Court appointed Chris Neilson of Trigild IVL LLC as receiver, as requested by the property’s lender,?Pacific Life Insurance Co. The lender had sued Oxford BIT Gallery Place Property Owner LLC, an affiliate of Oxford Properties, in Superior Court due to fears about the property owner's ability to meet obligations under a $185 million loan it took out in 2014.

As of February, according to Neilson's ninth receiver report, 42.38% of Gallery Place’s 260,267 square feet of retail, or 110,304 square feet, was empty. Of its 228,534 square feet of office, 85.82%, or 196,124 square feet, was vacant.

Monumental is quite familiar with Gallery Place, as it serves as home to District E, the company's 14,000-square-foot esports arena. On Wednesday, Leonsis spelled out the potential of bringing Gallery Place into the fold, literally connecting it to Capital One Arena. Just having that space is key — indeed, space, he said, was among the drivers behind his proposed move to 12 acres in Alexandria.

"We could take this walkway here and connect it," Leonsis said of the alley between Gallery Place and Capital One. "We could now start to think about what can we do architecturally, to make this area truly an entertainment community. We like to have an area that's all about sports and entertainment and music and dining. And we now have 200,000 square feet that we can expand to. It's not 12 acres, but it's enough. And that was really one of the most important things for me."