Scottish bank is project backer

District officials Wednesday broke ground for a new hotel and residential complex in Southeast that was partially financed by the Bank of Scotland.

The Capitol Hill Tower project, at New Jersey Avenue and L Street, is expected to be a key component in the District’s effort to revitalize the area along the Anacostia and Washington Channel waterfronts, and will feature 344 apartments and a 200-room Courtyard by Marriott hotel. There will also be a 232-space parking garage.

The Bank of Scotland will provide $21 million in financing, and it underwrote a $10 million tax-increment-financing (TIF) bond provided by the District. Under the TIF financing, a bond for development is given that will be repaid by the tax revenue produced by the project. The International Spy Museum, Mandarin Oriental Hotel and Gallery Place project were developed using this type of financing.

Officials said the Bank of Scotland became involved in the project because similar waterfront redevelopment has taken place in several Scottish cities.

The Capitol Hill Tower is the first project financed by TIF bonds that will cater to people with incomes at or below the area median income of about $40,000. Though there is no official affordable housing requirement tied to the project, the developer, New York-based Valhal Corp., plans to market the apartments to attract families working at and around the Navy Yard, officials said.

From Boca to the Beltway

Koger Equity Inc., a real estate investment company based in Boca Raton, Fla., made its entry into the Washington market with the purchase of two office buildings in Rockville.

The buildings comprise about 155,000 square feet of space, and are 91.6 percent occupied. Koger also bought 3.2 acres of undeveloped land, with a site plan to build a four-story, 105,000-square-foot building. The land and the two existing buildings are located in Rockville’s Discovery Office Park, just off Interstate 270.

“We are excited to be entering the suburban Washington, D.C., market with this acquisition,” said Tom Crocker, Koger’s chief executive officer. “We believe Koger has developed a solid reputation as one of the leading [top tier] office owners in the Southeastern United States and hope to build on that as we expand.”

In other news …

• The law firm of Davis, Wright, Tremaine leased 16,644 square feet at 1500 K St. NW, a 243,000-square-foot property also known as the Southern Railway Building. Jones Lang LaSalle represented Grosvenor, the building’s owner. Trammell Crow represented the tenant.

• Hubert Construction of Gaithersburg recently completed a 55,000-square-foot office building and 76,708-square-foot parking garage for the Federation of American Societies for Experimental Biology in Bethesda. The project connects to an existing 105,00-square-foot building.

• Buchanan Partners of Gaithersburg completed Phase II of the Euclid Business Center in Manassas. The project, with a total of 144,000 rentable square feet, is more than 80 percent leased.

• Property Lines runs Friday. Tim Lemke can be reached at tlemke@washingtontimes.com or 202/636-4836.