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ROSEMONT, IL-Mid-America Development Partners, based in Oak Brook, and the Harp Group, based in Chicago, have secured $136 million in financing for the construction of a 563-key InterContinental Hotel, at the northwest corner of River Road and Foster Avenue. BlueStone Real Estate Capital, based in Philadelphia, secured the financing, which was 90% loan-to-cost, from Amalgamated Bank's Ultra Fund, says Andrew Benioff, managing partner of BlueStone Real Estate Capital. The estimated cost of the project is $152 million, Benioff tells GlobeSt.com.
Construction is already under way on the 12-story, 350,000-sf hotel. The hotel will also have approximately 27,000 sf of meeting and banquet space and will have a Cenitare Restaurant of approximately 10,000 sf, Benioff tells GlobeSt.com. Additionally, there will be the Capital Grille restaurant and McCormick & Schmick's restaurant on freestanding outlots. The ground leases for the freestanding restaurants have terms "ranging from 10 to 15 years with extension opens that could make them as long as 25 to 30 years," Benioff says. Lease rates were not disclosed.
Construction for the hotel, including the Cenitare Restaurant, and freestanding restaurants are estimated to be complete in the third quarter of next year. Chicago-based Portfolio Hotels and Resorts, a subsidiary of the Harp Group, will manage and operate the hotel.
The $136-million debt and mezzanine construction loan has a term of 36 months with the option of the borrower of extending the loan for another 24 months. The rate is below 9%. The project is a good investment because there are few "pure play" hotels being constructed and because of the experience of the developers and the hotel brand, Benioff says. "Nothing new has come into that market in a great number of years," he says. "A lot of the properties are very old and tired in that market."
The deal is somewhat unique, in that financing is usually provided at about 75% loan-to-cost with the developer, than having to also secure mezzanine financing as opposed to securing one loan for 90% of the cost of the project, he tells GlobeSt.com. "It is very difficult to get that kind of financing," he says. BlueStone was able to secure the financing because of its relationship with Amalgamated Bank, says Matthew McManus, BlueStone's chairman. "The likelihood of this transaction hinged almost entirely on the relationship with Amalgamated," McManus says. Amalgamated Bank's Ultra Fund, based in Washington, DC was the lead lender for the financing with San Diego National Bank also providing financing.
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