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Hoffman-Madison Secures $113M for Parcel 5

WASHINGTON, DC—Even though some banks are becoming more skittish about real estate lending, especially construction finance, the money still flows for top projects. Well, any project that delivers yield.

By Erika Morphy | erikamorphy | | Updated on April 19, 2016
The Wharf The Wharf
WASHINGTON, DC—Hoffman-Madison Waterfront, the master developer of The Wharf, announced it has secured $113 million in construction debt financing for Parcel 5 from two banks, SunTrust Bank and M&T Bank. It is a telling transaction for both the project itself and the banks as the latter is become more skittish about lending to commercial real estate projects , especially construction finance. The financing will be used to develop a $194-million hotel site at The Wharf that will consist of a 175-key Canopy by Hilton and a 237-key Hyatt House. The two hotels, which will total 412 rooms and more than 40,000-square feet of street-level retail, are scheduled to open in Fall 2017. Hoffman-Madison Waterfront was unable to speak with GlobeSt.com in time for this article’s publication. Both hotels will be managed and operated by Concord Hospitality Enterprises Company. The hotels are designed by SmithGroup JJR. A Tightening Sector Real estate lending by banks is expected to tighten as the year continues, as lenders increasingly feel the end of the cycle is nearing. According to the Winter/Spring 2016 RELA-Chandan survey, multifamily and commercial real estate lenders overwhelmingly expect a peak in the market cycle this year or next and are repricing risk and lending accordingly. Then again, perhaps not. Real estate remains one of the few investments that deliver yield – a state of affairs that has kept the sector flush with liquidity. In Q4 of 2015, bank lending for commercial real estate increased by an eye-popping $46.6 billion.

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