The $50-million Hotel Vitale is being funded with a $25-million senior loan from Union Labor Life Insurance Co. and an $8-million mezzanine loan from Hall Financial. The borrowers are providing the remainder. The senior debt is a two-year construction loan with a three-year mini-perm and an interest rate in the 6% range. The mezzanine loan has a five-year term and an interest rate in the high teens.

Emerald Fund is a locally based residential real estate development company. Joie de Vivre Hospitality is one of the city's largest and fastest growing hospitality companies, with 25 boutique hotels, two day spas and Costanoa, a coastal lodge and camp. Company founder/CEO Chip Conley credited Hall Financial with being able to see through the current weak capital market for the hospitality sector. "They had the vision to see past the current soft market conditions in San Francisco," says Conley.

Hall Financial SVP Mark LaCourse, who originated the company's loan, says the biggest advantage this hotel project has is its location. In addition to being on the waterfront and across from a major attractor such as the Ferry Building, the immediate area is one of the city's major transportation hubs, with BART coming in from the airport and elsewhere, all sorts of bus routes originating in the area and ferries coming across from all areas of the bay. "We're making a bet that 24 months from now, when the hotel is delivered, the economic situation will be different," says LaCourse, who credits John Manning of the investment bank Buchanan Street Partners for bringing Hall Financial and the developers together and helping negotiate the transaction.