WASHINGTON, DC—Last week HFF reported that it secured $95 million in financing for the development of BLVD at Reston Station on behalf of Comstock Partners. HFF's Walter Coker and Brian Crivella placed the 48-month construction loan with Citizens Bank.
To be sure, the 21-story, 448-unit, luxury apartment building is a significant, even signature, project for the DC area. It will be located atop the entrance of the Wiehle-Reston East Metro Station in Reston, VA--the last stop on Phase I of the new Silver Line. The building will be the inaugural phase of the Reston Station mixed-use development that will include 550,000 square feet of office space, a 200-room hotel and another multi-family residential building.
However, there have been other large-size construction loans placed over the past year: JBG landed a four-year $99.2 million loan for Atlantic Plumbing, an infill mixed-use development in Shaw from Capital One; Fisher Brothers obtained a 20-year, construction-to-permanent $100.7 million loan with an institutional investor represented by Cornerstone Real Estate Advisers, LLC, for 701 2nd Street Apartments; StonebridgeCarras secured $121.6 million in construction financing from Wells Fargo Bank for the development of 8300 Wisconsin in Bethesda, MD.
HFF worked on all of these transactions and it is currently in the process of placing another large-sized construction loan for a project in Laurel, MD, Coker tells GlobeSt.com. "It is pretty big and we expect it to close roughly within the next 60 days."
So does five deals make a trend? Not in Coker's eyes. Smaller construction loans, usually financed by local lenders, are still the norm and will remain so, he says.
"In general the appetite for DC construction loans is strong as long as the projects have a good story, good sponsorship and are in a good location," he says.
The aforementioned deals are unusual in another respect, he continues, although that may be more of a function of HFF's own guidelines: the loans were all provided from a single source instead of a syndicate of lenders as is usually the case for large-size transactions.
"HFF doesn't allow syndication risk to be part of a deal, although realistically it is baked in," Coker says, referring to the informal and inevitable discussions lenders have among themselves as they consider a deal to see who might be interested in buying a piece of a transaction.
On paper, being the sole lender can make providers nervous in part because of the perceived supply risk there is in the market for multifamily, Coker says, "but they can, generally speaking, be talked off the ledge. With the amount of equity behind them in these deals they don't have to be concerned about getting paid."
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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.
