Forest City Secures $250M in Financing for 2.5M SF Mixed-Use Project in D.C.
- Sep 24, 2008
Flying in the face of the debilitating credit crunch, Forest City Enterprises Inc. has managed to close on a $250 million construction financing deal for Waterfront Station, a 2.5 million-square-foot mixed-use project underway in the blossoming southwest area of Washington, D.C. Forest City is developing Waterfront Station as a partner in Waterfront Associates, a joint venture involving affiliates of Forest City Washington Inc., Bresler & Reiner Inc. and Vornado/Charles E. Smith. The non-recourse loan will fund the project’s first phase, which includes two office structures totaling 628,000 square feet with ground-level retail space. The group of lenders that provided the financing for Waterfront Station–47.5 percent of which is owned by Forest City–includes Bank of Ireland, Wachovia, PB Capital and Landesbank Baden-Wurttemberg, New York Branch; Bank of New York was also involved, and will take on the role of administrative agent for the other participating banks. The loan covers the majority of the cost to complete Waterfront Station’s initial phase, which has a total development price tag of about $330.2 million. Waterfront Station occupies a 13-acre parcel in a previously overlooked section of the District that is in the midst of a renaissance, spurred in no small part by the recent development of the $600 million Nationals Park baseball stadium. When all is said and done Waterfront Station will feature 1,000 residential units, no less than 110,000 square feet of retail and restaurant offerings and 1.2 million square feet of office space. While D.C. has taken its hits in the office market just like most other major cities, it remains strong, boasting an average direct vacancy rate of 6.1 percent, according to a second quarter report by real estates services firm GVA Advantis. Leasing activity at Waterfront Station is a testament to the state of the market, as the District of Columbia has already staked its claim to the entire office segment of the first phase, and agreements are in place for Safeway, CVS and other businesses to occupy retail space. Phase I of Waterfront Station is on track to reach completion in 2010. Forest City’s ability to secure financing for its projects in a less-than-friendly lending climate appears to have little to do with just luck, as the company has attained loans for a bevy of other projects within the last few months. In August, the company’s subsidiary, Forest City Ratner Cos., closed on $167 million in construction financing for 80 DeKalb, a 335,000-square-foot residential building in Downtown Brooklyn; the development marks Forest City’s first multi-family construction endeavor in the borough. And in June, the company announced it had wrapped up loans totaling $100 million for three projects, including a 210,000-square-foot office building in Albuquerque, N.M., a mixed-use project in Pittsburgh, and a mixed-use office complex in Brooklyn. Headquartered in Cleveland, Ohio, Forest City is a $10.9 billion real estate company that owns, develops and manages commercial and residential real estate across the country.