PNC's $92M Carr loan is underwritten by a tax abatement

Commercial Observer first reported that PNC Bank has provided $92 million of construction debt for the 299-unit Class A apartment building at 2121 Virginia Avenue in Downtown Washington, structured with a five-year term and a 20-year tax abatement; United Bank is participating, and Berkadia's Brian Gould and Pat Cunningham arranged the financing. Apartment buyers have stayed active through stalling rent growth, but a five-year loan against a project delivering in 2028 is priced off something sturdier than rent: two decades of abated taxes.

Gould's statement reads the way a lender thinks: he called the development an especially compelling financing opportunity and cited Carr Properties' development record, rental demand from Foggy Bottom and George Washington University, and the abatement that strengthens the economics. The neighborhood sets the revenue line, the abatement sets a large share of the expense line for twenty years, and $92 million of debt sits between them.

The building is Class A with the amenity list to match—16,000 square feet holding an indoor pool, a club room, a fitness center, coworking and library space, a game room and courtyards—and construction begins this month, with the first units arriving in 2028.

A five-year term against a 2028 delivery leaves the sponsor roughly two years of lease-up before maturity, which suggests PNC underwrote a stabilized asset rather than a completion. That is inference, but it is the only reading that gives the term its shape. The takeout lands in 2031; if the abatement clock starts at delivery, it runs well into the 2040s.

This is the second PNC construction loan we've covered since late August, following the $50.9 million the bank provided for Citadel's North Miami nursing facility, where the collateral argument rested on senior-population growth and occupancy above 90 percent. Berkadia, meanwhile, closed a $12.4 million LIHTC deal in South Haven, Michigan, in early September, and both PNC loans lean on a feature that outlives the construction period.

As this publication has argued, apartment pricing is set at the block level rather than the metro level, and capital that underwrites a market without corner-level supply tends to overpay into lease-up. The Carr loan shows what the granular version looks like: a named sponsor, a named university nearby, a named abatement, and that is the layer at which $92 million becomes lendable. Foggy Bottom as a district is not what got approved.

The next abatement-backed project in the District will show which reading is right. If it clears on similar terms, the abatement is functioning as a standing equity substitute in D.C. multifamily and the $92 million becomes a benchmark for the structure; if the next sponsor has to stand on rents alone, this one will read as a one-off, and the district's pipeline will reprice accordingly.