2 Deals; 2 Financings on Opposite Ends of the Risk Spectrum

WASHINGTON, DC-The Washington area may be having its issues with stubborn vacancy rates and a projected uptick in distress on the horizon.  But that doesn’t mean that lenders’ appetite for transactions here has diminished--as two recent deals on opposite ends of the risk spectrum illustrate. One is a $64-million financing for 1129 20th St., NW, arranged by Cassidy Turley and provided by a life insurance company. The other is a construction loan and equity financing package put together for a complex, mixed-use development. Wells Fargo provided the construction financing; Principal Real Estate Investors provided the equity. HFF arranged that deal.

The $64-million loan for the Liberty Building is a fixed-rate long-term loan—basically the type of financing life companies do best. John Campanella and Paul T. Spellman III arranged the funding on behalf of the building’s owner, Liberty Property Trust. The 176,059-square-foot CBD asset was redeveloped in 2008 and received LEED Gold certification in 2010. It is currently 96% leased.

The other financial package was secured to develop 500 Madison, a mixed-use project in Old Town, Alexandria, Va. The developer, Alexandria Old Town North LLC, secured the equity through Principal Real Estate Investors for its Principal Green Property Fund. AOTN is comprised of the Pinkard Group, Buchanan Partners, Buvermo Properties and Theo Androus.

The 500 Madison site is located at the southeast corner of the intersection of Madison Street and North Asaph Street. The project is a rezoning of five properties from four owners and will deliver in 2014. The community will include the Kingsley, a 175-unit apartment that also has 52,000 square feet of street-level retail space that is 100% preleased to Harris Teeter.

“This was a complex deal whose defining characteristic was a multi-year assemblage of several parcels of land,” HFF senior managing director Sue Carras tells GlobeSt.com. That ability of the partners to work together over several years to get the zoning and entitlements necessary was a key piece.

Another was the pre-lease of Harris Teeter, which will move in upon completion. The Wells Fargo and Principal financing were separate transactions, conducted at the same time. Because of the project’s location and the prelease lenders pursued the bid aggressively, Carras says. “There were a number of interested parties on both the debt and equity side.”