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June 28, 2019  

Goldman Financing Mixed-Use Project in DC

Goldman Sachs has agreed to write an $840 million construction loan for the second phase of the mixed-use Wharf development in Washington.

The bank is expected to syndicate the floating-rate loan, which will have a term of up to six years. It’s unclear if part of the financing will be structured as mezzanine debt.

The property, along the Southwest Washington waterfront, is being developed by the team of Madison Marquette, PN Hoffman and PSP Investments. Eastdil Secured brokered the loan.

The second phase will encompass seven buildings with 578,000 square feet of offices, 105,000 sf of retail space, 255 apartments, 96 residential condominiums, 131 hotel rooms and more than 1,000 underground parking spaces. There will also be a marina with 226 boat slips.

The PSP partnership asked lenders for quotes on about $800 million of debt a year ago, but no loan resulted. Late last year, law firm Williams & Connolly pre-leased 300,000 sf for 15 years. That pushed the percentage of office-space commitments past 50%, making lenders more comfortable with the loan.

Last month, a Wells Fargo syndicate originated an $800 million floating-rate loan for the PSP partnership that refinanced construction debt on the bulk of the project’s 2.2 million-sf first phase, completed in late 2017. The syndicate also includes Morgan Stanley and Blackstone. The loan has a four-year term, plus extension options.

The collateral includes some 480,000 sf of offices in two buildings, two properties with roughly 650 apartments, and three hotels totaling 690 rooms. There’s also retail and amenity space, a 6,000-sf entertainment venue called The Anthem and parking. Eastdil brokered that loan as well. The first phase also includes more than 200 individually owned residential condominiums that aren’t collateral for the loan.

The second phase will complete the $2.5 billion Wharf development, which is on the Washington Channel, across from East Potomac Park. The “live-work-play” complex includes plazas and public areas.

PN Hoffman, a local developer, was awarded the right to develop the project in 2006, on land leased from the District of Columbia for 99 years. Local shop Madison Marquette has been a partner in the project since about 2008. PSP, a Montreal pension investment manager, is providing the bulk of the equity for the project.