Penzance, Invesco Get $94M Construction Financing for 280 KSF D.C. Development
Ground has broken on the trophy office project at 3001-3003 Washington Blvd. in suburban Washington, D.C., and Penzance and Invesco Real Estate have just gotten their hands on $94 million in construction financing for the 280,000-square-foot destination. News of the transactions closing comes to the fore less than three months after Penzance and Invesco announced the establishment of their joint venture for the development of the mixed-use property.
Acting on Penzance and Invesco’s behalf, commercial real estate services firm Jones Lang LaSalle Inc.’s capital markets group obtained the non-recourse funding through SunTrust Bank. The two-building complex will sprout up in the Clarendon submarket of Arlington, Va.’s Rosslyn/Ballston corridor, less than five miles across the Potomac River from Washington, D.C. Upon completion, the property will feature a 10-story, 200,000-square-foot tower linked to an eight-story, 80,000-square-foot building. In addition to Class A office accommodations, the structures, which are designed to qualify for the U.S. Green Building Council’s LEED Silver certification, will offer a combined total of 28,000 square feet of retail space.
It’s a premier package that attracted a big tenant well before ground broke. Research and analysis organization CNA pre-leased 175,000 square feet at 3001 Washington early this year.
SunTrust was among a bevy of lenders of various types that were ready and willing to provide financing for 3001-3003 Washington. The emergence of an enthusiastic group of funding sources does not exactly happen every day. “Getting construction financing is almost virtually impossible if you don’t have the building pre-leased,” Wes Boatwright, managing director with JLL, told Commercial Property Executive. “There’s an exception to every rule, but pre-leasing is pretty much a given, and having it pre-leased to a credit tenant is even better. Then there’s sponsorship. Those are really the driving factors.”
Additionally, Boatwright noted, banks are eager to put their money somewhere. “There’s just a lack of good solid construction deals out there for banks to do,” he said. “There certainly are some here and there, but if you need to have pre-leasing, there’s not of a lot of well pre-leased buildings out there seeking construction financing. The banks make money by putting money out so there was a lot of interest because of the sponsorship, the pre-lease and particularly the fact that the pre-lease was with a credit tenant.”
Boatwright pointed out that Penzance has deftly orchestrated the development of 3001-3003 Washington from the beginning. “I don’t think you can downplay the successful navigation of all the complicated components required to pull this off,” Boatwright said. “They assembled the site, they got it through the approval process in Arlington County and they were able to lure CNA. CNA could have gone anywhere; they had probably more options than they knew what to do with. So all those things are very difficult to control and navigate and Penzance did a wonderful job of doing that. It’s just one of those great situations that ends up being a win-win for everyone.”