Dealmaker: Phillips Realty Capital Structures $142M Lease-Up Bridge Financing

Phillips Realty Capital, Bethesda, Md., originated a $141.7 million bridge loan to recapitalize The Sur, a recently delivered 360-unit apartment community near Amazon’s HQ2 in Arlington, Va.

KKR, New York, supplied the financing to Erkiletian Development Co., Arlington, Va. through its KKR Real Estate Finance Trust and KKR Real Estate Opportunistic Credit Fund. The subject property is a Class A community in Arlington’s National Landing submarket.

PRC Managing Director Adam Bieber led the transaction, assisted by Managing Director Malcolm Shaw and Chief Underwriter Bill Wrench. They structured the financing as a three-year, non-recourse, interest-only bridge loan with extension options. Proceeds will recapitalize the construction capital stack, with reserves to fund additional lease-up costs.

Bieber called capital markets “inconsistent and choppy” at the moment, but said The Sur’s strong sponsorship and the continued strength of the greater Washington, D.C. multifamily market resulted in competitive bidding for this project.

The Sur occupies 1.6 acres at 3400 Potomac Avenue. The 12-story community includes 16,500 square feet of retail space and 25,000 square feet of amenities with Potomac River views.

The Sur is within the National Gateway mixed‐use development, a 40‐acre portion of Potomac Yard that includes a residential, office and retail assets served by the planned Potomac Yard Metro station.