FCP Raises Funds for Medical Research Center
Frederick Facility To House National Cancer Institute
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Friday, October 2, 2009
Federal Capital Partners, a Georgetown private-equity firm, has led an effort to raise $70 million to build a research facility in Frederick for the National Cancer Institute, a rare feat amid a down market for construction financing.
"It wasn't easy," FCP managing partner Esko Korhonen said. "There are not many construction loans being done today. But the unique nature of this project is that it is a pre-leased building with the government investing significant capital in the building."
Korhonen's firm is partnering with the Matan Cos., a Frederick developer, to build the 330,000-square-foot advanced-technology research facility at Riverside Research Park, which will house 1,700 NCI scientists and researchers when it opens in 2011.
Some of the employees are moving from Fort Detrick, home to the National Cancer Institute, and U.S. Army Medical Research and Materiel Command.
The FCP-Matan partnership, which secured a $52 million construction loan from Wells Fargo and US Bank, owns 32 acres where the new facility will be built. The site has room for expansion for government or private sector clients.
Korhonen would not disclose the terms of the lease. He said the National Cancer Institute is expected to spend at least $100 million to upgrade the facility. "We expect them to be there for some time," he said.
"The deal is important for the Frederick community, not only because of all the jobs that will be created through the construction project, but it also goes toward the goal of finding a cure for cancer," said Mark Matan, president of the Matan Cos.
The project will create nearly 500 construction jobs and start immediately.
"Given the current state of the banking sector and the credit markets, finding financing of this magnitude is a tremendous accomplishment," said Willy Walker, chief executive of Walker & Dunlop, a Bethesda-based real estate finance company.
Korhonen and Lacy Rice, both formerly of the Carlyle Group, founded Federal Capital Partners in 1999 to make real estate investments throughout the mid-Atlantic. The company is making an estimated $20 million investment in the new project, which will come from the $240 million it raised in a private-equity fund last year that invests in office, retail and residential properties.
"We think of this as a no-brainer," Korhonen said. "During 2008 and early 2009, we moved very cautiously in terms of investing our dollars. We thought that was the absolute right thing to do."
Korhonen said the firm has several other deals in the works that should close before the end of the year.
The FCP fund also includes the Monterey, a 432-unit high-end apartment building in Bethesda; Park Berkshire, a 598-unit multifamily project in Forestville; and Toledo Plaza, a 242-unit property in Hyattsville.
