News & Analysis

Goldman provides $123m for Virginia office park buy

Goldman Sachs has provided a joint venture with a $123m loan for the acquisition of the Canal Center office park in Alexandria, Virginia. The borrowers, Virginia-based American Real Estate Partners and private equity partner Investcorp, paid $176m for the four office properties, or nearly $327 per sq ft, putting the loan-to-cost at just under 70%. The […]

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Goldman Sachs has provided a joint venture with a $123m loan for the acquisition of the Canal Center office park in Alexandria, Virginia.

The borrowers, Virginia-based American Real Estate Partners and private equity partner Investcorp, paid $176m for the four office properties, or nearly $327 per sq ft, putting the loan-to-cost at just under 70%.

Canal_CenterThe five-year loan was structured with a reserve account for the joint venture to fund upgrades, tenant improvements and leasing commissions, in accordance with plans for an extensive capital improvement program for the properties.

The seller, Tishman-Speyer, acquired the property in 2006 for roughly $212m with Lehman Brothers, later renovating and restructuring the property in 2007 with the help of $85.5m in securitized debt.

The Class A mid-rise office park features four six-story buildings, which have 538,799 rentable sq ft of office space, set across 10.44 acres on a stretch of land along the western banks of the Potomac River, just outside of Washington, DC. The addresses of the four building are 11, 44, 66 and 99 Canal Center Plaza.

Canal Center is currently 83% leased, with none of its major tenants’ leases scheduled to expire prior to 2018. The acquisition is the second investment American Real Estate Partners has secured through its American Real Estate Partners Strategic Office Fund, and it marks its fourth in partnership with Investcorp.

Though the loan was not made from a Goldman Sachs fund, this summer the firm closed Broad Street Credit Real Estate Partners II, showing its ongoing willingness to bet on real estate. It marked the firm’s second real estate credit fund since the global financial crisis, raising $1.8bn and topping it up with $600m of its own capital.

Earlier this month Goldman assisted New York developer Ian Bruce Eichner by leading the financing for the development of a 777-foot condo tower rising at 45 East 22nd Street in New York City, supplying $340m from the Broad Street fund, while Dune Real Estate Partners provided an additional $80m in preferred equity.