Carr Properties , a Washington, D.C.-based commercial real estate developer that has built some of the city's largest office projects, is preparing to shed a big chunk of its portfolio as one of its major investors cashes out.

J.P. Morgan Asset Management has owned a large share of Carr Properties since 2007 through a fund it manages on behalf of clients. But earlier this year, the J.P. Morgan fund reached a deal to sell its stake, according to public documents that haven’t been previously reported.

J.P. Morgan would exit its 35.5% stake in the firm in exchange for three of Carr's office properties, which it would acquire free and clear of debt.

The deal was reached in February as a non-binding memorandum of understanding, according to March investor filings from Israeli publicly traded firm Alony Hetz, Carr’s other major backer.

The parties have yet to announce the deal's closing, and it is unclear which properties are involved. J.P. Morgan Asset Management and Carr Properties declined to comment.

While J.P. Morgan would exit Carr’s ownership group with the deal, Alony Hetz would increase its exposure: The filings said it would inject $100M in equity into Carr and up its stake from 47.8% to 77.2%. Alony Hetz didn’t respond to requests for comment.

The Israeli firm’s investor filings said the equity injection would help fund the J.P. Morgan redemption as well as “business expansion, with an emphasis on new development.”

Beyond the buildings-for-equity swap, Carr is selling and refinancing other assets as it reckons with approaching debt maturities.

The deals are poised to reshape the ownership structure and real estate portfolio of one of D.C.’s most influential developers of the last decade, a 30-year-old company that carries on the 140-year Carr family legacy of building in the nation’s capital. And it would significantly reduce Carr Properties’ footprint in the D.C. region and beyond.

John Kevill , a longtime D.C. broker who previously led U.S. capital markets for Avison Young , reviewed the public Alony Hetz documents and said the novel structure of the transaction makes sense in today’s office market.

“The trading of assets within a partnership as you’re dissolving it is unusual and likely reflective of the fact that properties in Washington, D.C., are unnaturally discounted right now and a hesitation to realize the current cash value of properties when it’s not necessary to do so,” he said.

Kevill said the reconfiguring of Carr’s ownership structure should make the company “well positioned” moving forward.

To execute the deal, the filings said Carr is in the process of selling and refinancing assets.

As of March, Carr was looking to sell two properties for a combined $100M to $110M and refinance four properties with loans maturing in 2026 with new loans at long-term rates, according to the documents.

Carr offloaded a Downtown D.C. office building last month, Bisnow can first report.

D.C. deed records indicate Carr transferred its interest in 1152 15th St. NW to Beacon Capital Partners , but the records didn’t include the price.

Carr bought the 394K SF office building for $258M in 2015 and executed a ground-lease transaction with SafeHold for the property in 2021. Deed records filed April 29 show Beacon took over the ground lease from Carr.

SafeHold executives on an earnings call this week said the leasehold interest in a D.C. property “successfully changed hands recently.” Beacon's property page now includes the building, also known as Columbia Center. A spokesperson for the Boston-based investment firm declined to comment.

Carr's downtown D.C. headquarters is on the market, although it has no control over the sale process.

Carr failed to pay off its $134M CMBS loan on the 417K SF building at 1615 L St. NW ahead of its September 2023 maturity, according to special servicer commentary in Morningstar Credit ’s database. A receiver was appointed in May 2024 and as of last month was marketing the building for sale.

The building was 50.3% leased at the end of February, according to the special servicer commentary. Pew Research Center ’s 74K SF lease ended in January, and a Pew spokesperson told Bisnow the nonprofit departed.

Bradley Arant Boult Cummings ’ 35K SF lease at the building expired in March, and the firm signed a sublease to move a few blocks away.

In November, Carr sold a 161K SF office property on Pennsylvania Ave. for $35M, well below the $108M it paid for it a decade before. The 35-year-old building at 2001 Pennsylvania Ave. was 67% leased at the time Carr sold it to George Washington University .

As of March, Carr owned 12 office assets totaling 3.3M SF, and it has two multifamily projects in development, according to the Alony Hetz filings. Its portfolio was 89.4% leased.

Carr's website today indicates it owns 11 office buildings, and it doesn’t include 1152 15th St. or 1615 L St.

The investor filings specified four trophy office buildings that Carr developed and intends to retain: The Midtown Center complex in D.C. that houses Fannie Mae ’s headquarters, the 600-foot-tall One Congress tower in Boston, a 300-foot-tall tower in Bethesda called The Wilson and the 12-year-old building at 1700 New York Ave. NW in D.C.

The filings don’t say what will happen to the remaining office assets in Carr’s portfolio, some of which are also new, high-end buildings.

Those office assets include Signal House, a 10-story building in D.C.’s booming Union Market neighborhood that houses TikTok ’s D.C. office, an Industrious coworking space and Stephen Starr-owned restaurant El Presidente. The spec office project delivered in 2021 and was 80% leased as of November .

Carr also owns 901 K St. NW near D.C.’s CityCenter, a building it developed in 2009 and renovated in 2021, and 1875 K St. NW, a 23-year-old office building in the heart of D.C.’s central business district.

It also owns two buildings in Northern Virginia , one that it completed in 2018 in Arlington ’s Courthouse neighborhood and a 25-year-old building in Old Town Alexandria .

Its remaining portfolio outside of the D.C. region consists of a 22-story office tower in Austin, which it acquired in 2021 and then renovated, and a 16-story office building in Boston’s financial district, which it bought for $222M in 2018 and then renovated.

Oliver Carr III , CEO of Carr Properties, carries on the long legacy of a legendary D.C. real estate dynasty.

His father, Oliver T. Carr Jr., was described in a 1979 Washington Post profile as “the undisputed leader in Washington's booming downtown development market.” At the time, his firm owned or managed 30 office buildings in downtown D.C., a portfolio it built in the years following the 1968 riots that destroyed large swaths of the city.

Carr Jr., who turned 100 years old last month, developed the Mills Building near the White House, the massive International Square complex, the Metropolitan Square building, Terrell Place in Chinatown, and he revived the historic Willard Hotel .

But the real estate family’s legacy started well before Carr Jr., who was the fourth generation of Carr builders in D.C. The first, Solomon Carr, immigrated to the city in 1885 from Leicester, England.

“There's really only a couple of names that are that synonymous with Washington, D.C., real estate, and Oliver [Carr III] certainly carried on the family tradition of being a shrewd real estate investor and developer,” said Kevill, the former Avison Young executive who launched his own D.C.-based advisory firm in 2022.

Carr Jr.’s company still operates today as CarrAmerica , a fully separate entity from Carr Properties that is led by CEO Austin Flajser and owns 40 properties along with the Carr Hospitality and Carr Workplaces brands.

Carr III founded Carr Properties in 1994 as Carr Capital Corp., and he first focused on arranging CMBS deals before beginning to acquire office properties in the late 1990s.

“The early days were defined by scrappiness as we pursued every avenue to grow the business,” Carr III wrote in an April 2024 LinkedIn post commemorating the firm’s 30th anniversary.

In 2005, the company rebranded to Columbia Equity Trust and went public as a REIT.

Two years later, it was taken private by J.P. Morgan Asset Management’s ​​Special Situation Property Fund, a deal that saw it rebrand to Carr Properties. Carr III called that deal a “monumental leap” for the company, but then he said it was followed by “tough years” as it navigated the Great Recession .

The company built several DMV office projects in the few years after the recession . And it bought the longtime Washington Post headquarters as the newspaper was preparing to move out, a site where it would later land D.C.'s largest private-sector office lease ever with Fannie Mae to anchor the glistening, 869K SF office complex known as Midtown Center.

Carr III called that project a “game changer” for the firm.

Alony Hetz came into the picture in 2013, acquiring nearly half of the company from the J.P. Morgan fund. The backing from the firm, one of Israel’s largest real estate holding companies, allowed Carr Properties to more than double in size over the following decade, Carr III wrote on LinkedIn.

The pandemic introduced a new challenge, he noted, as more people began working from home and office assets suffered a sharp drop in value.

He wrote that the office portfolio is “as well-positioned as it can be” because it has invested in providing the experiences today’s tenants seek. He also said that due to the “stress” on offices, the company is diversifying its holdings with a transition into residential.

Carr Properties now has two multifamily projects planned, a 312-unit building in Clarendon with a projected delivery date of 2028 and a 237-unit office-to-residential conversion in Old Town Alexandria. The latter project in February landed an $84M loan from Kennedy Wilson and an equity investment from Barings and is expected to deliver in late 2026.

“Standing still is not an option,” Carr III wrote last year. “No one knows what the future will hold; however, if we can maintain a dynamic and adaptable approach with a relentless focus on quality and service, Carr Properties will continue to grow and be successful for many years to come.”

CORRECTION, MAY 12, 5:45 P.M. ET: A previous version of this story misstated the address of 1875 K St. NW. This story has been updated.