While crowds of Christmas shoppers browse through the chic boutiques at Georgetown Park, the owners of the booming new Victorian-styled mall are doing some shopping of their own. They are in the market for investors -- most likely from abroad -- to provide $54 million in permanent financing in return for 50 percent or more of the ownership of the retail/residential complex.

Georgetown Park's owners are terminate composition shopping for overseas investors and offering to give up a major share of the project because double digit interest rates have dried up their usual sources of money.

Just as homebuyers have turned to "creative financing" because they can't get long-term low-rate mortgages, developers have found they can no longer count on big banks, insurance companies or pension funds to provide 30-year loans for their multi-million dollar projects.

Herbert S. Miller, president of Western Development Corp., one of the mall's three owners, said he hopes the developers will be able to negotiate a "convertible mortgage" with an American or European pension fund that would require giving up no more than 50 percent of the ownership. to negotiate a "convertible mortgage" with an American or European pension fund that would require giving up no more than 50 percent of the ownership.

Several different kinds of financing, each with terms tailored to particular investors, are being discussed and no contracts have been signed, Miller stressed. Under a convertible mortgage, the investor would lend the project the needed money and charge interest as on a regular mortgage. But after 10 to 15 years, the investor could convert the debt into a part ownership of the 100-store mall.

Frank Donohoe, of the Donohoe Construction Co., one of Miller's partners, is not as optimistic about delaying a partial takeover in ownership.

"We're looking for a partner, a foreign investor," he said. "Hopefully we won't have to give up any more than 50 percent." He added, "We don't like it, but it is the market today and for the foreseeable future."

James Braithwaite, president of Kan Am Realty, a German-based company that invests in real estate and energy projects in the United States and Canada and has financed other projects for Western, said Miller had approached him about Georgetown Park. Braithwaite said his company prefers investing in projects prior to construction and, therefore, turned down Miller's offer.

They the Georgetown Park owners believe it is more viable to bring in a partner than a lender in today's market," said Braithwaite. "Western is trying to find a partner that will give them the best set of circumstances."

In its six-month search for financing, Western has also approached Savage-Fogarty Realty, in Alexandria, which represents European banking interests; Jones Lang Wootton, which represents British pension funds, and Richard Ellis Inc., which represents several European pension funds.

Coldwell Banker, the big commercial real estate firm, has put together a prospectus for what is described as a "proposed $54 million equity financing" for Georgetown Park.

The financing proposal provides a rare glimpse of the details of a spectacular and expensive commercial real estate project. In the days when a small group of lenders provided most big mortgages, such documents were rarely seen by outsiders.

Georgetown Park's owners aren't happy that the details of their search for financing have become known. Western's Miller describes it as "like having people find out the color of the polka dots on my underwear."

The Coldwell Banker proposal for Georgetown Park shows the minimum rents are projected at $4.4 million in 1982 (the first full year of operation) and $6.6 million in 1992. But greater "investment rewards" are found in the "overage" income; that is, the mall's tenants are expected to enjoy such good sales that they will pay the owners an additional $1 million in rent in '82 and $4.5 million in 10 years. Coldwell Banker calls the figures conservative.

The estimated net cash flow for the first year is $5.1 million and would more than double in 10 years to $10.5 million, according to Coldwell Banker projections. The estimates are based on each tenant's contracted rent, sales volume and resulting overage for each year. The complex would have an estimated value of $117 million in 10 years, according to Coldwell Banker.

The $54 million represents construction costs and the amount of money the owners put into the project, Miller said. In addition to Miller, who owns 34.7 percent, and the Donohoe company, with 21.7 percent, the general partners include Richard L. Kramer, a principal in Western, 34.7 percent. The limited partners are the Kramer Children's Trust, 7.7 percent, and Thaddeus Lindner and Serguis Gambal, owners of Colonial Parking, with a half percent each, according to the partnership records at the office of the D.C. Recorder of Deeds. Colonial operates the underground parking garage at Georgetown Park.

According to partnership agreements, Donohoe is to receive $1.15 million in construction fees and Miller and Kramer a total of $1.1 million in developer fees in addition to any profits they share in the project. Miller said the fees would be paid out of the future sales of condominiums at the project or out of the permanent financing. No partner has received any fees yet, he said.

Developers look for equity financing these days instead of mortgage financing because selling part of the ownership in a project is cheaper than paying current interest rates on the fast disappearing fixed rate mortgage, said Bob Pickeral, senior vice president for commercial real estate at Riggs Bank.

"There is a tremendous amount of equity money abroad and in this country," Pickeral said. Pension funds, for example, are looking for real estate because it is one of the few investments that have kept pace with inflation.

Developers are especially attracted to foreign investors because they tend to charge lower interest rates than their American counterparts, according to several financial experts. In addition, there is a myth that developers can charge foreign investors higher prices, said James Foley of Jones Lang Wootton.

In searching for an equity partner, the Georgetown Park owners are following a trend that had its beginnings in the recession of 1974.

In the good old days, developers first lined up their permanent financing with a fixed rate 30-year mortgage for 75 percent of the costs, then obtained a construction loan and started digging.

But when interest rates started going up in 1974, residential and commercial lenders quickly realized they would lose money with a long-term fixed rate mortgage and started looking for ways to obtain a portion of the appreciation.

Last year, when the prime rate hit 20 percent, the fixed rate mortgage became virtually extinct and was replaced by a number of deals, all categorized as "creative financing." Traditional lenders starting becoming both lenders and partners and asking for a piece of the ownership, a piece of the cash flow plus some interest, or a combination so they, too, could keep pace with double-digit inflation. Each deal is different.

In addition, more and more projects are going without permanent financing until they are completed. Then owners start looking for a way to pay off the construction loan.

Through a combination of debt and equity financing, investors are looking for an internal rate of return of 16 to 17 percent, Pickeral said. A large part of that return is based on a projection that a property will enjoy an appreciation rate that matches or exceeds the inflation rate.

Miller, Kramer and Donohoe bought the land for Georgetown Park in December 1977 for $4 million. In October 1978 they borrowed $34 million from the Bank of New York and got a permanent financing commitment from John Hancock Life Insurance Co., at a rate reported to have been 9 1/2 percent. The John Hancock commitment expired, however, because construction that was to take three years took nearly four.

Unexpected construction complications delayed the completion and led to the project's costing "a lot more" than anticipated, Miller said. The overruns occurred at a time when interest rates on construction loans soared to more than 20 percent. Miller would not disclose the interest rate on the estimated $40 million construction loan for Georgetown Park, but said it was below market rates. The partners in Georgetown Park are still paying the construction loan, which is to be paid off when permanent financing is obtained.

The company had to squeeze 100 stores, 300 parking spaces and 128 condominiums between the historic storefronts of M Street and the stone walls of the C&O Canal, dynamite through 10 feet of solid rock for the basement parking garage and place steel struts and tons of concrete under Clyde's restaurant and the the canal to keep them from collapsing into the new excavation.

A year ago the Bank of New York refused to advance additional construction funds for Georgetown Park until the partners signed an agreement consolidating the earlier $34 million in loans because of the cost overruns, according to the agreement.

Later the partners borrowed another $6.3 million. Miller said the partners are personally liable for the outstanding loans.

The project opened its doors Sept. 27 and has been "extremely successful," Miller said. "We are extremely pleased. We couldn't be happier."

Although 96 percent of the retail space has been leased, only 40 stores have opened and are paying rent, Donohoe said.

The first phase of the project, Canal House, opened last year with Conran's homegoods store topped by 35 condominiums, all of which have been sold. Another 29 condos are on the market and about 50 percent have been sold at prices beginning at $150,000, Miller said. Construction will begin on 64 additional condos in April, he added.