PSP In Talks To Buy Out 3.5M SF D.C. Megaproject At $1.8B Valuation

The Wharf, a $3.6B megaproject that reshaped the waterfront of the nation’s capital over the last decade, is close to being taken over by its Canadian backer. 

PSP Investments is in talks to buy out The Wharf's majority owner, Hoffman-Madison Waterfront, according to three sources familiar with the situation, who were granted anonymity because the deal hasn’t been finalized.

The Ottawa-based pension fund has been a minority investor in The Wharf since its first phase began construction more than a decade ago. The talks to buy out Hoffman-Madison, a joint venture of local firms Hoffman & Associates and Madison Marquette, also include a potential refinancing of the project's debt.

Along with PSP’s deal to buy Hoffman-Madison’s majority stake, it is working to obtain a new loan of around $1.2B to refinance two loans it obtained in 2019 that are set to mature this year, according to a source close to the deal. The deals are expected to close by the end of next month. 

PSP and Hoffman-Madison both declined to comment. 

The sale of Hoffman-Madison’s stake in The Wharf, which was first reported by Green Street’s Real Estate Alert, would value the property at $1.8B. 

The deal would be for the bulk of the 3.5M SF mixed-use development, but some pieces aren’t owned by the partnership. More than 300 residential condominium units have been sold, two office spaces were bought by their occupants, and the InterContinental Hotel was built by a separate partnership.  

PSP would take 100% ownership of the remaining properties — including multiple office, hotel, retail and apartment buildings, as well as an underground parking garage — a source said. 

PSP provided a $220M equity investment in 2014 that paved the way for the project’s first phase to begin construction. It remained an equity partner when the owners secured an $800M refinancing deal on the first phase in June 2019 and when the partnership landed an $847M construction loan in September 2019 for Phase 2. 

A spokesperson for Eastdil Secured, which brokered both of those loans and is working on PSP's buyout and refinancing, declined to comment. 

PSP’s deal would be one of the largest capital transactions in D.C. commercial real estate history, and it would end the local ownership of the city’s biggest private development. 

Hoffman and Madison’s leaders, Monty Hoffman and Amer Hammour, have served as the public face of The Wharf at milestone events since its first groundbreaking. Both of their companies are headquartered at The Wharf.

The property includes several other major office occupants: law firms Williams & Connolly and Fish & Richardson, lobbying firms Van Scoyoc Associates and Cornerstone Government Affairs, the American Psychiatric Association, media company The Atlantic, the Business Roundtable and Washington Gas.

The Wharf has dozens of restaurants that have cemented it as one of D.C.’s top dining destinations, including Del Mar, Officina, Ilili Restaurant, Pink Tiger, Philippe Chow DC, Gordon Ramsay’s Hell’s Kitchen, Mi Vida, The Grill, Hank’s Oyster Bar and Lupo Marino. 

Hoffman was selected in 2006 to develop the mile-long stretch of the Southwest D.C. waterfront along the Washington Channel. Its initial partner, Baltimore-based Struever Partners, was a casualty of the 2008 financial crisis, and Hoffman brought on Madison Marquette as a new partner in 2010. 

The team received nearly $300M in local government subsidies, including a $198M tax increment financing package and a 99-year ground lease at no cost for waterfront land that was valued at around $95M.

Before breaking ground in 2014, the team had to receive a series of local and federal approvals, and it had to bring in another equity partner and secure a construction loan. Their search for another equity partner brought them from China to the Middle East to Canada, where Madison Marquette had a prior relationship with PSP.

“We had suitors that wanted to come in with the capital, but they all had too big of price tags, they wanted too much control, or they were formulaic in how they approached it, and they wanted to have certain things a certain way, so we were holding out for the right partner,” Hoffman told Bisnow in a 2019 podcast interview.

PSP has been mostly quiet about its involvement with The Wharf. It may have remained a fully silent partner if it weren’t for press reports on its involvement, the Washington Business Journal reported in October 2017 when it interviewed its then-global real estate head, Neil Cunningham. When asked what gave PSP the confidence to make such a large investment in the project, he told the WBJ it was “our operating partnership on the ground, Hoffman and Madison.”

“This is obviously more intensive than many of our investments, but we rely on talent and expertise on behalf of our partners on every project we do,” he said. 

The development team celebrated the grand opening of the first phase on Oct. 12, 2017. Phase 1 spanned more than 2M SF of development, including three hotels, two office buildings, two apartment buildings, two condo buildings, dozens of restaurants and retailers, and a 6,000-seat concert venue, The Anthem. 

The second phase delivered exactly five years later with another 1.25M SF of offices, apartments, condos, hotel rooms, retail and restaurants. The development also has more than 17 acres of public space, including four piers and multiple waterfront parks. 

In the years since breaking ground on the project, Hoffman has had a series of leadership changes. 

The firm named Mark Dorigan to take over for Hoffman, the founder, as CEO in December 2019, and then in June 2024, it replaced Dorigan with Brian Dawson, who had led the Wharf’s office leasing efforts with JLL.

Longtime executive Shawn Seaman left the company in August and was replaced in the role by Maria Thompson. In November, Hoffman Chief Investment Officer Jon McAvoy, who had spent 13 years with the company, left to join PRP. Hoffman has remained in the chairman role.