Ground Breaks for City's Largest Hotel

SAN ANTONIO-Work gets under way today for the largest hotel development in San Antonio history. The $285 million project will result in an 885,000-sf 1,000-room hotel connected to the Henry B. Gonzalez Convention Center. The deal is being financed with $208 million of pre- funded project revenue bonds in a two-part transaction that includes Empowerment Zone Bonds and Taxable Bonds. Marathon Asset Management of New York and Austin, TX-based Faulkner USA are providing the equity for the project.Hotel Investments, LP, a partnership of Marathon Real Estate and FaulknerUSA, will lease the site from the City of San Antonio pursuant to a 75-year ground lease and License Agreement with an option to extend 15 years. FaulknerUSA will be responsible for the construction of the hotel, to be completed in 2008. Hyatt Corporation will manage the hotel.Located San Antonio’s Downtown Riverwalk, the hotel rooms will soak up approximately 550,000 of the total 885,000 sf. Filling another 117,000 sf will be a 32,700-sf grand ballroom, a 21,600-sf junior ballroom, and 62,765 sf of pre-function space. A description of other hotel amenities was not readily available Friday morning. The city is still negotiating with Faulkner over its plans to build condominiums atop the hotel and over how many underground parking spaces it will provide. Jon Halpern, Managing Director and head of the Real Estate Group at Marathon Asset Management, was unavailable for comment because he was attending the groundbreaking event. City officials reportedly expect the hotel will make the city more competitive with Sunbelt hot spots such as Orlando, New Orleans and San Diego.FaulknerUSA is currently delivering convention center and hospitality projects for clients around the country. Some current and recent projects include the 800-room Hilton in Austin, TX; a 450-room Hilton in Omaha, NB; a 226-room Hilton in Vancouver, WA; and 1,110-room Hyatt in Denver, CO.