Good news on the Embassy Suites planned across from Discovery Green. Also included are updates on OPP + Chase Tower
http://www.chron.com/disp/story.mpl/...f/6126669.html
Hotel developer snags a construction loan
By NANCY SARNOFF
Copyright 2008 Houston Chronicle
Is the credit freeze beginning to thaw?
Hotel developer Nick Massad just closed on a construction loan to build a $55 million Embassy Suites near the George R. Brown Convention Center.
Massad, president of Houston-based American Liberty Hospitality, was ready to start construction on the project earlier this year when his loan fell through.
The national hotel lender he was negotiating with said it would no longer finance the project because it couldn’t get other banks to participate, a practice used by lenders to limit their exposure to large loans.
"It took six months longer than it should have to get the financing in place," Massad said. "It’s just so difficult out there."
Indeed, real estate projects of all types have been shelved in recent months as developers can’t get money to build.
The latest to be put on the back burner was Sonoma, a condo and retail development slated for Rice Village. Most of the 4.7-acre site had already been cleared when the deal was called off.
Massad’s new loan came from Amegy Bank, which is syndicating part of it to Victoria Bank and Texas Capital Bank in Dallas.
The five-year financing is for 60 percent of the construction cost. The developer is using 20 percent equity and a 20 percent, five-year mezzanine loan for the balance.
The project will take almost two years to develop.
Massad expects the 19-story Embassy Suites to break ground by March. It will be built at 1515 Dallas at LaBranch near Discovery Green Park and the Hilton Americas.
The property will have 6,000 square feet of meeting space, a rooftop swimming pool, restaurant and street-level cafe and wine bar. Parking for the property will be underground.
Amegy has financed projects for Massad in the past. It’s what he thinks helped him secure the loan in today’s shrinking credit market.
Banks, he said, "want to do business with the people that they know."
The 262-room Embassy Suites is also the first project to be financed since the city passed an ordinance to spur new hotel construction within walking distance of the convention center, Massad said.
Last month, the City Council voted to rebate 100 percent of the city’s portion of the hotel’s occupancy tax on an annual basis for seven years for new hotel projects built within walking distance to the convention center. The city’s portion of the 17 percent hotel tax is 7 percent. The remainder is divided among the county, state and the Harris County-Houston Sports Authority.
The rebate applies to hotels with at least 350 rooms. Massad qualifies because his project was already under development, in that the land had been acquired, the franchise obtained and the building designed.
The ordinance also includes a 50 percent rebate of the city’s hotel taxes to developers that build in other parts of downtown.
The idea behind the new rule is that more hotel rooms near the George R. Brown will boost convention business here.
It played a big part in Amegy’s decision to grant the loan, Massad said.
As it turns out, there could be another benefit to the delay.
Massad expects his construction costs to be 8 to 10 percent lower than they would have been a year ago.
"So many projects are getting scrubbed, general contractors are going to fight for work," he said. "When things get down, it’s sometimes the best time to build."
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