Goldman Sachs Makes $233 Million Investment in Port Covington

Sagamore Development Company announced this week that New York City’s Goldman Sachs has joined the 235-acre Port Covington redevelopment effort as an equity investor. Goldman Sachs is committing $233 million to the South Baltimore project, the largest single private equity investment made by the firm’s Urban Investment Group (UIG) to date. As a result of this investment, both organizations will jointly own the project and develop the infrastructure in Port Covington. The infrastructure construction will lead to the residential and commercial development of the site. The total cost of the Port Covington redevelopment is $5.5 billion.

Sagamore’s plan for Port Covington includes Under Armour’s 50-acre, 3.9 million sq. ft. global headquarters at the former Port Covington Shopping Center; 1,500,000 sq. ft. of destination, attraction, entertainment, and specialty retail; 500,000 sq. ft. of “maker” and industrial/light manufacturing space; 200-plus hotel rooms; 1,500,000 sq. ft. of office space (in addition to the Under Armour Global Headquarters); and civic and cultural uses including 40-plus acres of public parks, a public waterfront, and other public facilities. It also includes more than 7,500 residential units, which could total up to 14,000 units comprised of rental and for-sale properties at various price-points, and potential sites for a post office, school, library, fire station, police paddock, and cultural center.

For transportation and infrastructure, Sagamore is planning a light rail spur along McComas St. from Westport with three new stops; redevelopment of Hanover St., McComas St., and Cromwell St.; I-95 on-ramp and off-ramp modifications; bike share stations; three water taxi stops; and a site circulator that could be rail or bus. New on-street cycle lanes have already been installed in Port Covington.

To pay for infrastructure, parks, and ecology improvements in Port Covington, Sagamore is spending $327,780,988 of its own money on infrastructure and will receive $534,795,000 in TIF from Baltimore City. Under Armour, however, has pledged to not use any TIF proceeds for the infrastructure at its campus. Sagamore is also hoping to use those bonds to seek matching funds from state and federal sources in the amount of $573,683,000. The total infrastructure investment at the project would be $1,436,234,988.

Sagamore and Goldman Sachs will own and develop the land in Port Covington that is adjacent to the campus of the future 50-acre headquarters of Under Armour. Under Armour is not involved in this transaction and owns its land.  This joint undertaking also does not include City Garage, Nick’s Fish House, Sagamore Spirit Distillery, and Rye Street Tavern, as well as any of these businesses’ related land parcels in Port Covington.

Sagamore and Goldman Sachs will uphold the $39-million community benefits agreement with the SB7 Neighborhoods, and an MOU with Baltimore City that includes an affordable housing requirement.

“It was important to us to find an equity partner that shared our common vision for urban economic growth, job creation and local workforce development here in Baltimore City,” said Tom Geddes, CEO of Plank Industries, the parent company of Sagamore Development, in a press release.  “Goldman Sachs Urban Investment Group, with its history of mission-driven and impactful investments in urban areas is the perfect partner and investor for Port Covington and Baltimore City as a whole.  This is a significant step forward and delivers on a major promise by the Port Covington development team to bring outside private investment and commercial capital to Baltimore City.”

“The fact that such a major partner is joining us in redeveloping Port Covington speaks volumes,” said Marc Weller, the real estate developer behind Port Covington, in a press release. “We promised we’d bring in outside private institutional investors to Baltimore City and to Port Covington, and we have.  We’re honored to have Goldman Sachs UIG as our partner going forward and excited for all the continued progress happening in Port Covington.”

“Baltimore is one of the country’s greatest cities. We are proud to be a part of, and build upon, its rich legacy and heritage,” said Margaret Anadu, Goldman Sachs managing director and head of the UIG, in a press release. “Given their incredible dedication, partnering with the Sagamore team on Port Covington affords us the opportunity to be a part of Baltimore’s exciting future. This unprecedented public-private partnership will provide Baltimoreans with new jobs and neighborhood assets that are more connected and accessible through thoughtful planning and modern infrastructure.”

“This is tremendous news for Baltimore City and our workforce,” said Baltimore City Mayor Catherine Pugh in a press release. “Baltimore is seeing more major national investment in our real estate market. This investment, especially from such a prominent partner as Goldman Sachs, means more jobs, more opportunity and more economic growth for Baltimore City. Investors are seeing what we already know about Baltimore:  we’re a city on the rise, and an economic hub with a strong, diverse workforce. This is significant progress for the Port Covington project.”

Sagamore is also planning a full-court press to lure Amazon’s recently-announced plans for a second headquarters (HQ2). Amazon has issued an RFP for cities and developers for the construction of a campus equal to its campus in Seattle which includes 33 buildings, 8.1 million sq. ft., 40,000 employees, and 24 restaurants/cafes, according to the RFP. Amazon has paid $43 million into the Seattle public transportation and estimates it attracts 233,000 hotel nights by guests visiting Amazon and 53,000 additional jobs as a result of its investment.

Last week, Weller told SouthBMore.com, “more than any other place in the country, Baltimore City and Port Covington would be a perfect home for Amazon’s second corporate headquarters. Port Covington has the available land with a prime waterfront location on the east coast, adjacent to I-95, with ready access to international airports, rail, ports and other distribution points. Greater Baltimore boasts an entrepreneurial, creative and diverse local workforce that is growing every year and could easily support the 50,000 jobs needed for Amazon to fill. Along with Under Armour, having another major innovative company’s headquarters at Port Covington would be a huge boon for Baltimore City and its workforce. We will work with state and local officials to aggressively pursue this opportunity.”

Geddes thinks this investment from Goldman Sachs will boost its case, “We think Baltimore City and Port Covington would be a phenomenal location for Amazon’s second corporate headquarters,” he told SouthBMore.com. “Having the vote of confidence of an institution like Goldman Sachs is nothing but helpful. We are excited to work with state and local officials to aggressively pursue that opportunity.”

Geddes told SouthBMore.com that a specific location within Port Covington for this potential campus has not yet been selected. “We are just beginning discussions, but we will assist in any way we can to help Baltimore City and the State of Maryland put their best foot forward for this exciting opportunity.”

Rendering courtesy of Sagamore Development

Screenshot courtesy of Apple Maps

Rendering courtesy of Sagamore Development  (click to enlarge)

About the Author: Kevin Lynch

Founder and Publisher of SouthBmore.com, longtime resident of South Baltimore, and a graduate of Towson University. Diehard Ravens and O's fan, father of three, amateur pizza chef, skateboarder, and "bar food" foodie. Email me at Kevin@InceptMM.com and follow me on Twitter at @SoBoKevin.