REIT Eyes Loan to Build Marriott HQ
A Boston Properties partnership is talking to lenders about $300 million of financing for the development of Marriott International’s new headquarters in downtown Bethesda, Md.
The Boston REIT and its partner, Bernstein Cos. of Washington, would put the debt toward construction of an 825,000-square-foot office building that’s fully pre-leased to the hotel company. The project’s cost is pegged at about $400 million.
The preference is for a floating-rate loan with a term of 3-5 years. The team is pitching the assignment directly to banks and other lenders, asking for quotes on nonrecourse financing. The strong corporate credit ratings of both Boston Properties and Marriott, combined with the full occupancy, are likely to result in stiff competition for the loan and tight pricing.
Marriott, which has had its global headquarters in Bethesda for decades, plans to move from its current site in a suburban setting five miles away to the new building at 7750 Wisconsin Avenue. The 22-story structure will form a complex with a 14-story Marriott-branded hotel on the same block.
Bernstein will develop and own the 230-room hotel itself, according to local reports. The firm’s plans for financing that component are unknown. The construction price tag for the entire complex has been placed at some $600 million.
Demolition and preliminary construction have already begun at the site, which previously housed low-rise commercial buildings. Bernstein purchased the parcels over several years. The office building is scheduled for completion in 2022.
The property is a few blocks from the Bethesda Metro station, connecting to downtown Washington about seven miles to the south. Downtown Bethesda is in the midst of redevelopment as an urban center, with a number of recently completed or planned office, residential and mixed-use properties.
After Marriott announced a couple of years ago that it planned to move out of its current headquarters, at 10400 Fernwood Road, officials in Washington and Northern Virginia signaled an interest in trying to lure the company away from Maryland. The hotel operator eventually opted to keep its 3,500 employees in Bethesda, with a package of more than $60 million of tax benefits and taxpayer-funded subsidies.