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District not ready to sever ties with Qatari capital despite Arabian rift

Tuesday, June 6, 2017

Washington Business Journal by Daniel J Sernovitz

The District's economic development arm has no plans yet to withdraw its support for Qatari capital for the city's commercial real estate as five Arab nations cut ties with the Persian Gulf country for allegedly allowing militant activity.

Qatari cash in particular has helped jumpstart the redevelopment of the old convention center site into what's now CityCenterDC. A contingent of D.C. dignitaries followed up more recently with a visit to the Middle East to court sovereign wealth funds from Qatar, among others. Those dignitaries included Brian Kenner, D.C.'s deputy mayor for planning and economic development, and D.C. Councilman Jack Evans, D-Ward 2. Business representatives including from Hines, CityCenterDC's developer, were also part of that contingent.

Kenner, in a comment emailed to the Washington Business Journal, said the District's economic development department has not changed its position on capital from Qatar but that it is keeping a close eye on the situation and the appropriateness of such foreign investment in D.C.-backed projects.

"DMPED is closely monitoring developments that include capital from the Middle East and also remain in communication with our counterparts in Qatar," Kenner said in the statement. "We have seen no impact on related District projects or on Middle Eastern interest in District investments. For every investment partnership, both the private partners and the District conduct due diligence to ensure funding is proper and compliant with federal laws. Moreover, the District remains a top location for international investment and we will continue to engage international partners to best support the residents of D.C."

The District is not doing business directly with Qatar, as its ties are more indirect, but it has taken an active role facilitating relationships between foreign investors and D.C. developers and hopes to build on that relationship with other big projects in the works.

Evans, during that Middle East trip, remarked that Qatar "invested in CityCenterDC at a time when we couldn't get money," he previously told my colleague Karen Goff. "We want to encourage them to continue to invest in the city, in projects like RFK Stadium, St. Elizabeths and McMillan." Evans could not be immediately reached for comment in light of current events.

Hines developed CityCenterDC in partnership with a Qatari sovereign wealth fund, the Qatari Diar Real Estate Investment Company, which infused the project with $700 million in 2011. Qatari Diar, the real estate investment branch of Qatar's Qatari Investment Authority, is 90 percent owner of CityCenterDC, with Hines controlling the other 10 percent.

Representatives for Hines declined to comment.