Douglas Lands $107M In Construction Financing For Northwest D.C. Apartment Project
Rising interest rates and cautious debt markets have made it more difficult to close deals for new projects, but that didn't stop Douglas Development from landing a nine-figure financing package in D.C.
Douglas secured a $65M construction loan and $41.6M in preferred equity for a 354-unit multifamily project in Northwest D.C.'s Takoma Park neighborhood, the developer announced Tuesday.
Reflective of the current market, completing the financing took a village of partners. The loan was provided by a consortium of United Bank, Sandy Spring Bank and Metropolitan Bank, while EB5 Capital provided the preferred equity. The loan has a four-year initial term and the deal's loan-to-cost ratio is around 50%, Commercial Observer reported. The developer said it is now ready to start construction.
"The ability to execute in the current market conditions is a testament to the strength of the sponsorship as well as the project," EB5 Capital Senior Vice President Jon Mullen said in a statement.
Douglas bought the site at 6830 and 6896 Laurel St. NW from Washington Theological Union for $17.5M in 2013, Bisnow reported at the time. The former WTU buildings on the site have since housed Strayer University and a continuing education facility but are now vacant, UrbanTurf reported.
The developer revealed plans in February 2022 to develop a multifamily building within the site's existing zoning that would range from 45 to 63 feet in height, according to UrbanTurf. The project would include 28 inclusionary zoning units reserved for those making between 60% and 80% of the area median income.
Eric Colbert & Associates is the project's architect, and CBG Building Co. is the general contractor. Douglas, one of D.C.'s largest landowners and most active developers, completed another Takoma Park project with 102 multifamily units in 2016.
“We look forward to bringing our Takoma development to fruition with the support from our partners in this deal," Douglas Managing Principal Norman Jemal said in a statement. "The project will provide a new residential option in a historic area, while also offering an affordable component that is in accordance with DC’s inclusionary zoning program.”
Financing has been increasingly difficult in the last year as the Federal Reserve has aggressively hiked interest rates. Fed Chairman Jerome Powell testified to Congress Tuesday that the central bank could raise rates more aggressively, and to higher levels, than previously thought as inflation has proven difficult to tamp down.