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Life's good with a credit tenant (they're the pocket aces of the industry). Just ask Penzance and Invesco, which recently secured a $94M construction loan for 3001-3003 Washington Blvd in Clarendon, allowing work to start on the submarket's biggest office project in recent memory. The loan is due in large part to a 175k SF pre-lease there with the Center for Naval Analyses.

The development's strong sponsor was also crucial to closing the deal, says JLL's Wes Boatwright, center, who brokered the deal with colleagues Jon Goldstein and Mike Yavinsky. Signing the Center for Naval Analyses—a non-profit contractor with an over 70-year history of working with the Navy—as the building's lead tenant enabled the bank to provide more debt, he tells us (it's always nice to go into a negotiation with the US Navy backing you up); the loan has a 63% LTC."The more you get in and understand the tenant, the higher up the leverage curve you can go."

Penzance COO Joe Margolis. But the going is tough for tenant-less office projects. "It's virtually impossible to get a loan for spec office construction without pre-leasing," Wes tells us. Over 10 lenders showed interest in the Washington Boulevard deal, he tells us, and four were willing to go non-recourse. But none outside of SunTrust were willing to underwrite the entire project: "On a large, complex transaction like this one, most lenders don't want to hold over $50M."

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