Goldman Sachs Explains Why It Invested $233 Million in Port Covington

| April 5, 2018 | 0 Comments

Margaret Anadu, managing director of New York’s Goldman Sachs Urban Investment Group (UIG), was in Baltimore Tuesday to talk about her company’s $233-million investment in the 235-acre Port Covington redevelopment project in South Baltimore.

Goldman Sachs is now co-owners of the project along with Sagamore Development Company. Weller Development Company will be leading the development and construction of the project.

The $233-million investment from Goldman Sachs is the largest single private equity investment made by the firm’s UIG to date. At a press event yesterday, Anadu spoke about the company’s decision to make such a large investment in Port Covington.

Here’s some of what Anadu had to say:

“The Urban Investment Group started in 2001. The idea was very simple at the outset – that we have a ton of capital and a lot of smart people and we should be really thoughtful about the way can deploy our capital, not just for financial return, but to make a real impact in the community and in the lives of the folks where we live and work.”

“A big part of it is investing in the build environment – investing in housing and schools and grocery stores and industrial facilities and commercial enterprises. All of those things that create a healthy and thriving and livable neighborhood. All of those things should not exist for just one sector of the population. You can invest in underserved communities, do it in a way that generates an impact and do it in a way that’s profitable.”

“We’ve done a lot of work in revitalizing industrial facilities, thinking about modern manufacturing. We started doing a lot of that in Newark and Philadelphia.”

“Going into new cities is, I’ll be frank,  it’s difficult. Our approach requires very deep engagement with local stakeholders. That is not just the real estate community, but it’s also the local public sector, local education community, the health sector… it’s all of those things. We are incredibly disciplined and thoughtful when we think about new places.”

“We spent a year and a half or so before culminating the investment [in Port Covington]. We have investment as small as $2 million and our investment in Port Covington is $233 million, so that’s clearly a very significant leap there. What was really kind of crucial in pushing us to make such a significant investment in a city for the first time was just the magnitude of what can happen at Port Covington. The real estate has so much potential. It’s significant, it’s well situated, the waterfront, the highway access. All of that from a real estate fundamental perspective is very important, very attractive, and very exciting.”

“I think what really got us over the hump is the range of impacts that can happen here. The jobs element alone, not just the temporary jobs you’ll see through construction, although those jobs almost become permanent given that the construction period is so long. The housing component, the industrial, and entrepreneurial aspect that you are seeing at City Garage, and the extent of that that will happen during the project. The extent of public space that will be accessible to all of Baltimore, and reconnecting that waterfront back to the broader citizens of Baltimore. It’s really exciting.”

“I don’t know when the next time is we’ll make an investment this large, but the impacts that we think we are going to achieve here over the longterm of this project we think justifies that size investment. We’re pretty pumped.”

“This team is incredibly impressive, and we felt the community engagement. There is a real commitment to connect what is going to happen at Port Covington to all of these other neighborhoods and the city at large.”

“Between the real estate, the team, the impacts, the scale, I think the opportunity is, not to be dramatic, but pretty once-in-a-lifetime. “

The Port Covington team announced Tuesday that Phase 1B is now underway.  This phase will add new infrastructure and buildings on the fields around The Baltimore Sun’s Sun Park facility. The property is bordered by Hanover St., McComas St., and Cromwell St. This phase will likely include three mixed-use office and retail buildings totaling around 200,000 sq. ft. but could increase if a large office tenant is inked to a lease.

Another change coming to Port Covington will be a new use for the former Schuster Concrete Building on McComas St. adjacent to Swann Park. Marc Weller of Weller Development said that 97,000 sq. ft. building will have an immediate use in the next six months and that more information will be announced next month.

“There are some really clever ideas with the activation plan that we have and we are in the process of finalizing some of that,” said Weller.

The Schuster building was proposed as the first office building in a bid to lure Amazon’s second North American headquarters.

The Port Covington master plan 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. The development includes 2.5 miles of waterfront along the Middle Branch.

Rendering courtesy of Sagamore Development

Screenshot courtesy of Apple Maps

Rendering courtesy of Sagamore Development  (click to enlarge)

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