Re-printed from the July 16, 2010 Commercial Mortgage Alert
A partnership will soon seek up to $170 million of construction financing for an office building at a planned mixeduse development in suburban Washington.
The partnership, led by investment shop T-Rex Capital of Boca Raton, Fla., and development firm Georgelas Group of McLean, Va., plans to construct a building with up to 550,000 square feet in Tysons Corner.
The building, which has a projected cost of more than $250 million, is the first step of an ambitious 5.5 million-sf development at Leesburg Pike and Spring Hill Road. The 28-acre project will surround the Tysons West Metrorail station, which is scheduled to be built by 2013.
All told, the development, dubbed Spring Hill Station, is slated to include 2.5 million sf of office space, 2.5 million sf of residential space, 450,000 sf of hotel space and 163,000 sf of retail space.
The initial office building is expected to encompass 500,000-550,000 sf. The projected cost is $257 million to $283 million. The T-Rex partnership will seek a loan with a 60% loan-to-cost ratio, or $154 million to $170 million, depending on the building’s eventual size.
The partnership is also seeking equity investors to help fund the remaining 40% of the development cost. It is betting that the pre-approved rail station and the imprimatur of land-use officials in Tysons Corner will entice institutional backers.
The partnership intends to have a lead tenant in place before the loan closes. It has already begun preliminary discussions with lenders, according to market players, and will probably launch a formal marketing campaign in September.
The group will look for a floating-rate loan of 1-3 years, preferably from a lender that would also be interested in providing a permanent mortgage at maturity. It has yet to pick a broker, but likely will before formally approaching lenders.
T-Rex is an opportunistic investment firm co-founded in 1999 by Thomas Mulroy. The firm, which is active in the New York and Washington areas, buys properties and debt. Georgelas has built 1 million sf of commercial space in and around Fairfax County. The shop was founded in 1964 by John Georgelas.