The Washington Post

NVCommercial raises $25 million fund for distressed Washington real estate

A rendering of Dominion Heights, an Arlington project for which NVCommercial completed a deal in May. (Courtesy of NV Commercial)

NVCommercial, a developer planning a 1.3 million-square-foot mixed-use project for the intersection of Leesburg Pike and Chain Bridge Road, has raised a nearly $25 million fund aimed at investing in real estate projects around the Washington region that have stalled or slowed and are in need of capital to continue.

Stephen Cumbie, president of NVCommercial, said he said the fund was aimed at projects in need of between $2 million and $10 million. Despite the relative strength of Washington’s commercial real estate values, he said he believed it was the right time for the fund because of roughly $1.7 trillion in debt that will becoming due between 2011 and 2015.

“One of the things that’s motivating us is there is a huge maturity of real estate debt between 2011 and 2015,” Cumbie said. “So there are going to be quite a few [situations] that are good properties that are largely leased and performing, but when their loans come through they are not going to be able to refinance at that amount.”

Cumbie said the firm planned to buy small ownership stakes — or “gap equity” — in projects, or issue mezzanine loans. “We’re not looking to buy real estate per se, we are looking to buy into deals that are owned by other people….they are more financial investments than they are property investments,” Cumbie said.

NVCommercial invested in three deals before completing the fund. Two are in the District: the 66-unit Lincoln Park Terrace project on Capitol Hill, for which NVCommercial provided a nearly $1 million loan, and the Woodley-Wardman condo and town home on Connecticut Avenue. The third is Dominion Heights, an Arlington project for which NVCommercial completed a deal in May.

Cumbie’s bet is that banks will continue to shy away from lending at terms needed to move these deals forward. There may be a lot of opportunity in $1.7 trillion.

Follow Jonathan O’Connell on Twitter here.

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.



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