The joint-venture owners of hotel giant Marriott International’s new headquarters in downtown Bethesda, Maryland, have exercised an option to extend a $252.6 million construction loan for another year, according to Boston Properties, which has a 50% stake in the property, the largest office building in the Washington, D.C., suburb.
The loan used to finance the completion of the 735,573-square-foot building at 7750 Wisconsin Ave. was scheduled to pay off at the end of last month. The Bernstein Cos. makes up the other half of the joint venture.
The extension comes as Federal Reserve watchers think Wednesday’s borrowing rate increase may be the peak.
“We continue to expect that mortgage rates will drift down over the course of the year as the economy slows, as we move closer to the Fed lowering rates beginning in 2024, and as financial market volatility finally begins to settle down,” Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, said in a statement.
Effective June 1, the 7750 Wisconsin financing will bear interest at a variable rate equal to term SOFR plus 1.35% each year — about 6.07% — and will mature in April 2024 with a one-year extension option, according to Boston Properties’ first-quarter earnings report.
After extending the construction loan, Boston Properties has about $481.2 million of debt maturing through 2024. The real estate investment trust said it expects to fund 2023 and 2024 debt maturities using available cash balances, proceeds from asset sales, draws on an existing revolving credit facility, and through refinancings.
Marriott’s new headquarters houses more than 3,500 employees.