Dealmaker: Phillips Realty Capital Secures $62M in Mixed-Use Construction Financing

Phillips Realty Capital, Bethesda, Md., secured a $44.5 million construction loan and $17 million in preferred equity for 1401 Pennsylvania Avenue SE, a multifamily-retail development under construction in Washington, D.C.

CAS Riegler Cos., Washington, D.C., Neighborhood Restaurant Group, Alexandria, Va., and May Development, Bethesda, Md., are building the Class A asset.

EagleBank, Bethesda, Md., supplied a $44.5 million development loan and EB5 Capital, Bethesda, supplied a $17 million preferred equity investment. Phillips Realty Capital arranged both components of the capital stack.

Created by the Immigration Act of 1990, the federal Employment-Based Immigration Fifth Preference or EB-5 program encourages foreign citizens to invest in U.S. commercial real estate by allowing them to obtain U.S. green cards by investing $500,000 or more into a project that creates or preserves at least 10 full-time jobs.

The 1401 Penn development will include 167 apartments with views of the U.S. Capitol building. The seven-story building will have studio, one-bedroom, two-bedroom and three- bedroom apartments and 19,000 square feet of first-floor retail space fitted to house a restaurant, bar, food market and coffee shop. NRG has pre-leased and will operate 13,500 square feet of the retail space.

The Potomac Avenue Metro Station is 50 feet away in the burgeoning Capitol Hill submarket.

The venture received redevelopment approvals in April 2016 and delivery is expected in summer 2019.