Deal Splits Winkler Holdings

Deal Splits Winkler Holdings

Indiana and Maryland firms acquire family real estate empire.

A $2.3 billion deal has been reached by Mark Winkler Company to sell the majority of its real estate portfolio of both residential and commercial properties to Duke Realty Corporation of Indianapolis, Ind., and JBG Investment Fund, an affiliate of JBG Companies of Chevy Chase, Md.

"All of Winkler's commercial office projects in Alexandria, most of the remaining development land and the commercial office management and development operations of the Mark Winkler Company will be sold to Duke Realty. The residential apartment properties and the shopping center at Mark Center in Alexandria will be sold to JBG Investment Fund," said Randal B. Kell, CEO, Mark Winkler Company.

"The impact this will have on Alexandria couldn't have come out better. Duke Realty will be using this as a base for their expansion into the east and they will be taking all our employees as well as the properties," Kell said.

Closing on the deal is set for Feb. 28, according to Kell. The only property under the control of Winkler in Alexandria that will not be sold is the Winkler Botanical Preserve at Mark Center.

"The Botanical Preserve is a separate 501 C3 organization operated by a separate board of directors under an endowment established by the Winkler family. That will continue," Kell said.

WINKLER COMPANY sold the 500-room Hilton Hotel and Conference Center at Mark Center in 2001. It also contains the Finn and Porter Restaurant.

Clyde's Restaurant, 1700 N. Beauregard St., "is part of the sale but Clyde's has a long-term lease and wants to remain where they are as far as I know," Kell said. "I don't think this sale will make any real changes because there really isn't much flexibility for change."

Primarily, Duke will be acquiring the office/commercial complex while JBG will take control of the residential apartment properties and the shopping center at Mark Center, according to the Winkler announcement. The latter has been "an active owner, developer and manager of Washington metropolitan area real estate since 1960."

Overall the sale will include approximately 5,020 apartment homes in 12 separate residential communities in Alexandria, Arlington and Fairfax County plus approximately 3,590,000 square feet of commercial office space in 35 office building located in the District of Columbia, Alexandria, Reston and Fairfax and Loudoun counties.

Additionally, there are just over 161 acres of undeveloped land parcels "in several key locations in Northern Virginia that Winkler has acquired over the years, which, when fully developed, could ultimately support another 4,557,000 square feet of commercial, residential, retail and industrial space," according to Winkler.

One of those remaining parcels is located along I-395 adjacent to Mark Center. "This has always been zoned for high rise development and could be developed as either residential or office space under the zoning," Kell said.

"JBG has bought all our residential properties in Alexandria and have agreed to also take all our employees. They will continue to operate the properties as they have been under the Winkler Company," Kell stated.

"They [JBG] bought the properties in line with their policy to hold and operate the properties as apartments. However, ultimately that could change depending on market conditions. The properties are in excellent condition," he said.

This sale includes Winkler's Millbrook property off North Beauregard Street, a high-end four-story garden style apartment complex mixed with several hundred townhouse units. "These are presently all rental properties but they could be converted. However, I don't believe there is any intention to do that presently," Kell said.

ALEXANDRIA HAS SERVED as headquarters for the Mark Winkler Company throughout its 60-year history as a family-owned and operated enterprise. It employs approximately 150 people throughout its Alexandria operations, split between headquarters and property management.

In Alexandria, Winkler's major development is the 350-acre, mixed-use development at I-395 and Seminary Road known as Mark Center, named for company founder Mark Winkler, who died in 1970. In addition to the hotel and shopping center, it contains 14 commercial office buildings and seven apartment communities, including the Southern Towers complex.

All these properties were developed by Winkler over the past 40 years on land purchased by Mark Winkler in the 1940s when the site was two farms, well before the interstate highway system. Southern Towers, constructed in the 1950s, was his earliest endeavor.

Recent development at Mark Center has largely consisted of high-rise office buildings that house the headquarters of the Institute for Defense Analysis, the Center for Naval Analysis, the American Diabetes Association, Systems Planning and Analysis, and the Association for Supervision and Curriculum Development. It is also home to the Alexandria School Board.

As the city's largest mixed-use development, Mark Center and Mark Winkler Company "has consistently been among Alexandria's largest taxpayers for over 30 years." In 2004, City Council approved a development plan for the remaining undeveloped parcels at Mark Center which contemplates an additional five high-rise buildings totaling 1,742,000 square feet. This will be transferred to Duke Realty, according to the Winkler Company.

SINCE MARK WINKLER'S death the company has been guided by his widow Catherine Winkler, now 92, and his daughter, Tori Winkler Thomas, who serves as chairman of the board. They have developed and endowed the 44-acre botanical preserve and education center located in the middle of Mark Center.

Dedicated to science and environmental education of area youth, the preserve hosts the Wildflower Festival each spring which celebrates the blooming of more than 300,000 plants at the site put there by the family. The preserve has also established a partnership with the Alexandria schools that focuses on the system's science curriculum.

"Each year, the preserve's education staff conducts classes four days each week during the school year in its Catherine Lodge Education Center and on its wooded acreage for all Alexandria students from the first through eight grades as well as area students. Last year, more than 12,000 students were served by the program," according to the company.

When asked why the family had decided to sell its portfolio, Kell said, "When you are a family-owned business, it’s always a question of how long to stay and when is the best time to sell. This appears to be that best time."

JBG would not speak on the record until the sale is conducted in late February, according to Kathy Holmes, vice president of corporate communication for Mark Winkler Company. A representative of Duke Realty had not returned phone calls at press time.

The sale of the company's commercial assets were brokered by Goldman Sachs while the sale of its residential assets was brokered by CB Richard Ellis, according to the company.