Bethesda, MD, November 30, 2020 –
Phillips Realty Capital announced that its client, Erkiletian Development Company, closed on a $141,789,000 bridge loan from global investment firm KKR to recapitalize The Sur, a recently delivered Class-A 360-unit luxury apartment community in the National Landing submarket of Arlington, Virginia near Amazon’s HQ2 and Virginia Tech’s Innovation Campus in Potomac Yard.
Phillips Realty Capital Managing Director Adam Bieber led the transaction and was assisted by Malcolm Shaw and Bill Wrench. The loan was structured as a three-year, non-recourse, interest-only bridge loan with extension options. Proceeds will be used to recapitalize the construction capital stack, with reserves funding additional lease-up costs.
Bieber explained, “Capital markets have been inconsistent and choppy. The strong sponsorship, exceptional quality of the real estate, and continued strength of the Greater DC market resulted in any extremely competitive bidding war for this project.”
Inspired by Big Sur, a rugged stretch of California’s central coast, The Sur melds sustainable and rustic features to create a warm and sophisticated atmosphere with a modern twist. Situated on a 1.67-acre site at 3400 Potomac Avenue, the 12-story luxury community offers modern unit interiors, state-the-art amenities and abundant outdoor living. Just a short walk from the new Amazon headquarters and Virginia Tech’s Innovation Campus, the property includes 16,503 square feet of retail space and 25,000 square feet of amenities with sweeping views of the Potomac River and downtown D.C. Amenities include an outdoor “ Sur” park with a “tree” filled grove for the via, outdoor handcrafted nests to relax in, firepits, abstract Redwood trees with hanging basket chairs, Zen garden, a fully equipped fitness and wellness center, yoga meditation pod, two beautiful rustic yet modern lobbies with air purifying plant wall, surf board installation authentic to the Northern California surfer, pet spa, conference center and rooftop with tranquil water feature and organic styled cabanas. 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.
“KKR is focused on finding great opportunities with top sponsorship in our target markets. We are thrilled to be the lending partner in this stage of The Sur’s transition from completed project to stabilized asset,” said Adam Simon, Director on KKR’s real estate team. “The Sur’s characteristics and sponsors match our high bar for lending in this environment, and we appreciate Phillips Realty Capital’s thoughtfulness and expertise in working with us to structure the optimal debt package for this asset.” Funding for the loan is being provided by KKR Real Estate Finance Trust and KKR’s real estate opportunistic credit fund.
“Our family is very appreciative of Phillips Realty Capital and KKR’s collaborative efforts in delivering the right loan for The Sur,” said Stefanie Erkiletian, president of Erkiletian Development Company. “We also want to extend our gratitude to our construction lender, partners, vendors, and consultants who all played pivotal roles in helping us arrive at this moment. We poured our hearts out into the design and development of this legacy asset that we look forward to sharing with our community for generations.”
“The Sur is an exceptional accomplishment for Erkiletian and I could not be more proud of their hard work,” Bieber said. “As a family business, Erkiletian designs buildings for long-term ownership, and treats their residents like family and it shows. We are appreciative of the opportunity to work as their ambassador on such an important assignment, and we are grateful for all parties that worked so tirelessly throughout the whole process during the pandemic to arrive at this result.
Bieber added, “To our lending partners at KKR – bravo! Their team provided a seamless process and execution, and we look forward to the next opportunity to collaborate in the near future.”
About Erkiletian Development Company
For over 50 years, Erkiletian has developed, constructed and owned properties that have earned the firm a reputation as one of the most trusted names in the Washington D.C. real estate and business community. Today, its portfolio of residential, commercial and mixed communities is proof of its dedication to creating pleasing and effective environments that flourish and grow into desirable destinations. Founded by Myron (Mike) P. Erkiletian, the firm remains a family-owned business that is guided by the principles he set in place: to develop, build and invest in properties that define a region; to employ building and management practices that are responsible and forward thinking; and to be committed to integrity in every relationship we make. For more information visit www.erkiletian.com.