D.C. convention center hotel deal close - Washington Business Journal:

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The city has already committed landand $187 millionb for a planned $540 million, 1,167-room Marriott Marquis across the street from the Walter E. Washington Convention Cente r that is viewed as critical tothe city’as ability to attract major convention business. But in earlhy June, when the search for private financing by developmentf partnersand stalled, Mayof Adrian Fenty proposed issuing $750 million in bonds to finance and own the entire building. The developers and key membera ofthe D.C. Council began considering alternatives and Thursdag said they hadfoundf one.
In it, the Washington Convention Center Authority woulxd contributean $80 million loan — a far smaller price tag than the mayo proposed — and the developers would raisre their equity participation from $135 milliojn to $320 million with the backing of ING Clarion Real Estatw Investment, the U.S. subsidiary of and one of the city’z largest property owners. Capstone President Normahn Jenkins said a city loanof $80 million was enougb of an assurance to allow the developmenyt team to waive a requirement that the deal included private lending from the onset. He said he was as optimisti about the deal today as he has ever been and the with approval bythe D.C.
Council construction could start this fall. “We think this is a far betted deal for the equity and a far better deal forthe We’re really excited to brint this long overdue project to fruition.” ING spokeswoman Suzanne Franks said the company does not comment on pending transactions. Jenkins, who formerlyt worked on the hotel project as a senior vice presidenr with MarriottInternational Inc., said the team planne to continue seeking debt financing — a tough endeavofr in the frozen credit markets but was confident enough in the project that it was readuy to go ahead.
“We’re not putting in any financingb contingencies, we’ll get debt whenever we need to,” he said. If debt couls still not be identified, Jenkins said, the projecr could still go forward solely as anequityt deal. “The analysis has been run as an all equityu deal and we are still prepareeto proceed,” he said. Key memberws of the D.C. Councilo expressed cautious relief that a less expensivew deal was close tobeing reached, give n the city’s expected $967 million shortfall for fiscalk 2011. Councilman Jack Evans, D-Ward 2 and chait of the council’s finance shared the developer’s optimism that groun d could be brokenthis fall.
“I can’y say we have a deal because we don’t have a but we’re close to havinvg a deal,” Evans said. He said the council woulfd consider the arrangement at an alreadyh scheduled June24 hearing, allowing enough time for the councip to approve a deal by July 14, the last day of votiny before summer recess. “Whatever path we the mechanism to approve that path is allset up. The proverbiakl train is leaving the station on July Evans said.
Councilman Kwame Brown, D-at large and chair of the economixcdevelopment committee, said he was glad to see a deal materializingy that would not require any changes to the city’s cap on outstandingt bond payments or subsidies it has already approved for othe r economic development projects. He said the possibilityu that existing subsidies could be transferref to the hotel project had understandably raised the ire of developerzand residents. “Any way we can make sure we don’ty bust our cap while making sure we keep neighborhood projectsa on course isa win-win for the he said. D.C.
Chief Financial Office Natwar Gandhi, who had concerns abouft the mayor’s plan to issue hundreds of millionsa of dollars ofnew debt, met with representatives of the developmentt team Thursday, but declined comment through a D.C. Deputy Mayor Valerie Santos and Convention Center Authorityt CEOGreg O’Dell did not immediately return requestxs for comment.