WASHINGTON, DC-Madison Marquette and PN Hoffman, the partners behind the Wharf project will have in place construction financing within two to three months, according to Simon Mildé, chairman & CEO of the Greenwich Group International, which was tapped to secure financing for the two-phase, $1.5 billion waterfront development. Construction of phase one, slated to begin next year, will clock in at $830 million and Mildé tells GlobeSt.com he is in discussions with a number of banks for a $500 million construction loan. "We are finding that several banks are willing to head up a syndicate and many banks are willing to participate in the syndicate."
Syndicates, of course, were a fairly common way to finance large projects before the crash, especially as most lenders do not like to go beyond $100 million for a project. Even now, there are some banks still willing to front larger amounts, he says. "A handful of banks in the U.S. and Canada and other foreign markets are prepared to lend up to $400 million to $500 million. And we are talking with them too."
"I am very confident that construction financing will be arranged within the two to three months."
Greenwich has been retained to raise the equity as well. Here, Mildé is in discussions with a number of national and global investors, ranging from life companies, sovereign funds, property companies and "major entrepreneurs overseas especially." The equity will total about $260 million and that is expected to close around the same time as the construction loan.
The Wharf will stretch nearly one linear mile opposite East Potomac Park. It will be a 3.2-million-square foot redevelopment of some 27 acres of land and 24 acres of riparian rights along the Potomac. Ehrenkrantz, Eckstut & Kuhn have overseen design efforts for the project, which is aiming for Gold LEED certification.
At full build out, the Wharf When will have more than 1,350 residences, 960,00 square feet of office space, three hotels encompassing 500,000 square feet and 680 rooms, 358,000 square feet of retail space and 13,000 square foot artisanal food market. Phase One of the project will focus on the rental apartments, 134 condominium residences, three hotels and much of the office, retail and convention space.
Once the financing for phase one is in place, money for phase two should be easy to secure when the time comes, Mildé said. "There is a lot of value in the land so we don't anticipate having to raise more equity – it will just be another construction loan." And that, he says, will most probably be provided by the bank or banks that offered the first round of financing.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
