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WASHINGTON, DC-All parties have signed on the dotted line, making it possible for Corus Bankshares Inc. subsidiary Corus Bank to close on an $81.5-million non-recourse loan for the construction of an office project to be known as Republic Square.

Developer Republic Properties was on the receiving end of the funds, which will be directed toward the development of a 385,000-sf spec office facility with ground-level retail and a parking facility to accommodate up to 400 vehicles. The nine-story structure is the first phase of what will be a two-building 587,000-sf property in the city’s Capitol Hill submarket. Phase II is not yet on the timeline, but will consist of an eight-story 202,000-sf building.

Corus Bank’s decision to provide a non-recourse construction loan for Republic Square was a tad unorthodox in the world of real estate financing. There is no preleasing in place at the class A office building, and while the Capitol Hill location boasts some of the higher rents in the city–$39 per-sf, according to Advantis Real Estate Services Co.’s Mid-Year 2004 Office Market Report–the address on the 600 block of N. Capitol Street is not quite in a top-tier area. Additionally, Corus Bank did not allow itself to be dissuaded by potential risks arising from the fact that the city is selling the land to Republic Properties and retains the right to interject if the endeavor does not meet the District’s public interest criteria.

“Non-recourse spec construction is part of the bread and butter of Corus Bank’s business,” Corus Bank first vice president Dwight L. Frankfather notes. “While there are always risks in a deal, it helps when the borrower has the level of experience and expertise that [president and CEO] Steve Grigg and Republic Properties have. This will be a beautiful building and an anchor for the neighborhood.” The first structure is scheduled to reach completion in 2006.

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