WASHINGTON, DC-Affiliates of the Wilkes Co. and Quadrangle Development Corp. have secured a fixed-rate, long-term construction-to-perm loan for a multifamily project they will develop in the Mt. Triangle neighborhood. Cassidy Turley’s Christian Miles and Phil Mudd brokered the loan, provided by a life company, but declined to provide the amount or rate other than to say the interest rate is low and that the loan-to-cost is 65%, which pencils in at a little over $200,000 per unit.

Despite the lack of detail, the structure is clearly of interest to the commercial real estate development community, providing as it does a great hedge against interest-rate risk for certain projects. The loan provides a construction lease-up term of three years, plus a 10-year permanent term, Miles tells GlobeSt.com.

“The beauty of the transaction is that the rate is fixed,” he says, obviously eliminating the interest-rate risk for the borrowe. More typically, a borrower would have to secure a floating-rate construction loan and then would be able to lock in long-term financing when the property is close to lease-up.

“A lot of developers would like to do this,” Miles says. “The only lenders that really offer it, though, are the life firms, and they don’t do a lot of construction finance to begin with.” When they do, it is only for the best properties and the best locations with moderate leverage. Finally, this type of loan is not suitable for all borrowers—only a long-term buy-and-hold developer would benefit, Miles adds.

The project Wilkes and Quadrangle are developing is a 14-story, 234-unit apartment located at 440 K St. It will feature 182 one-bedroom, 26 one-bedroom units with dens and 26 two-bedroom apartments.

The building will be located across the street from the CityVista retail project, which, in fact, helped Cassidy Turley secure the financing. “We learned from the CRE lending community just how active Mt. Vernon is right now,” he says. According to Miles, Kettler and Equity One have projects planned for the submarket. “There’s a lot going on there now,” he says.