Developer secures financing for The Bow's main tower
By Mario Toneguzzi, Calgary Herald April 2, 2009 7:03 AM
The developer of the iconic 58-storey Bow tower has announced it has secured the financing to continue moving forward with the $1.5 billion project in the heart of downtown Calgary.
Wednesday night, H&R Real Estate Investment Trust said
"commitments have been secured from various Canadian financial institutions resulting in the successful syndication, co-led by RBC Capital Markets and TD Securities, of a $425-million construction facility."
"Legal documentation is currently being negotiated. The closing of the financing, which is expected within the next few weeks, is subject to certain customary conditions, including completion of documentation, which are typical for a construction facility," said the REIT.
The announcement came after news that the south block of the Bow skyscraper project, which was to house office, retail and cultural space, had been “deferred” due to the challenging economic times and construction for the time being will be stopped at grade level on that site.
In a news release Wednesday night, H&R president and CEO Tom Hofstedter said securing financing for the main tower is an important milestone in the two million square foot development which will become the future headquarters for EnCana Corp.
"This major financing is a testament to the confidence that Canadian financial institutions have in H&R's ability to build a landmark office tower successfully," he said.
Earlier this week in an annual information form, the REIT said: “The REIT and EnCana have agreed to defer the development of the above-grade part of the south block. EnCana has agreed to reimburse the REIT for certain development costs incurred to date in respect to the south block. The REIT is currently bearing the risk for construction overruns and project delays as the REIT does not have a fixed price contract on this project.”
“The REIT is working toward securing construction financing for the Bow . . . The REIT’s ability to obtain financing for its development commitments is a material uncertainty which may cast significant doubt on the ability of the REIT to continue as a going concern.”
The south block part of the project is for a smaller office tower housing office, retail and arts and cultural space in about 200,000 square feet. It is to be a seven-storey complex to be built where the historic York Hotel formerly existed. The complex is to be built using brick taken from the demolished hotel.
The entire project is located on two blocks along Centre Street and 5th and 6th Avenues S.E.
In its annual information form, the REIT said the north block development and 1,361 parking spaces underneath the north block and south block developments are pre-leased to EnCana for about 25 years.
The REIT said construction of the north block development began in the spring of 2007 and is expected to be completed and delivered in phases with the
first phases of the building being completed in the second half of 2011 and the estimated completion date for the entire office space being in 2012.
The REIT's total investment in the Bow as at December 31, 2008 was approximately $402 million.
The REIT expects to spend about $375 million on the project over the next 12 months.
mtoneguzzi@theherald.canwest.com
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