PSP Investments in Talks to Acquire The Wharf Development in D.C.

The Wharf, a significant mixed-use development covering 3.5 million square feet in Southwest Washington, D.C., is on the verge of a notable transition. Canadian pension fund Public Sector Pension Investment Board (PSP Investments), previously a minority stakeholder, is advancing discussions to acquire the property, potentially valuing it at approximately $1.8 billion.

Current Ownership and Development Background

PSP Investments has been an integral part of The Wharf since its inception, investing $220 million in equity back in 2014. The development, spearheaded by the partnership of Hoffman & Associates and Madison Marquette, completed its extensive first phase in 2017 and furthered its expansion with additional developments in subsequent years.

The two firms, operating under the banner of Hoffman – Madison Waterfront, currently control a substantial portion of the mixed-use district, although certain residential and commercial units have changed ownership since the project’s completion.

Details of the Proposed Acquisition

Negotiations for the acquisition are reportedly being facilitated by Eastdil Secured, a brokerage that has previously aided in significant financing efforts for the project, including two large refinancing packages. The current deal is expected to include a refinancing package of around $1.2 billion to address expiring debt obligations.

Financing and Expansions

Since launching the first phase in mid-2014, The Wharf has seen substantial financial activity. Key milestones include:

• 2019: A Wells Fargo-led refinancing package totaling $800 million, marking an important financial step for the project’s initial phase.
• Second Phase Financing: An $847 million construction loan led by Goldman Sachs, noted as the largest private construction loan in Washington, D.C. at the time.

The second phase introduced additional residential, office, and commercial spaces, as well as recreational areas along the waterfront, further enriching the community experience.

Attraction for Businesses

The Wharf has become a favored locale not only for residents but also for businesses seeking attractive office spaces. Law firms such as Williams & Connolly and Kelley Drye & Warren have recently expanded their presence in the area, securing substantial leases in the developing office space.

Recent Developments

The expansion of facilities has included:

• A 26,000-square-foot expansion lease by Williams & Connolly, enhancing their footprint at 670 Maine Street to over 313,485 square feet.
• A recent lease by Kelley Drye & Warren for 65,000 square feet in late 2023, indicating ongoing demand for prime office space.

Conclusion

This potential acquisition and refinancing endeavor by PSP Investments not only underscores the value of The Wharf but also reflects the ongoing growth and attraction of mixed-use developments in urban environments. As negotiations unfold, The Wharf is poised to maintain its status as a vibrant hub along the Potomac River.