The Bow clears another financial hurdle
By Mario Toneguzzi, Calgary HeraldApril 23, 2009 4:01 PMComments (1)
The iconic, 58-storey Bow skyscraper, being built in the heart of downtown Calgary, has cleared another financing hurdle.
H&R Real Estate Investment Trust announced Thursday it has now closed a $425-million, 42-month construction facility for the development project with a syndicate of lenders led by RBC Capital Markets and TD Securities and including The Bank of Nova Scotia, Bank of Montreal, Alberta Treasury Branches and Canadian Western Bank.
“Today’s news basically signifies full steam ahead,” said Michael Brown, associate vice-president of Matthews Development (Alberta) Inc., which is building the massive tower. “The largest obstacle that you can face in this economy our partners were able to overcome.”
The Bow, a two million square foot office building, will be the headquarters of EnCana, which is leasing the entire tower and all of the 1,361 underground parking spaces for an initial term of 25 years. The REIT said the project is expected to reach 32 storeys by the end of this year and its full height by June 2010.
Recently, the REIT announced the south block of the Bow project, which was to house office, retail and cultural space in about 200,000 square feet, has been”deferred”due to the challenging economic times and construction for the time being will be stopped at grade level.
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 bricks taken from the demolished hotel.
The entire project is located on two blocks along Centre Street and 5th and 6th Avenues S. E.
“Everything is on time, on budget. The steel is actually going up. It’s getting faster and faster as we get better at erecting the steel,” said Brown.
In a news release on Thursday, REIT president and CEO Tom Hofstedter said: “We are very pleased to have reached this important milestone in the development of what will be the largest and most prominent office tower in Canada west of Toronto.”
“The successful syndication of the financing is a testament to the confidence that Canadian financial institutions have in our ability to complete this landmark development on time and on budget. Our ultimate strategy is to secure a strategic joint venture partner, and to use a portion of the sale proceeds to repay our construction facility, thereby leaving us with excess cash proceeds and our remaining interest in the Bow free and clear of any debt,” he said.
The REIT said that as of March 31 it had incurred about $420 million of the $1.33-billion budget.
“We believe that we have now successfully resolved key issues regarding our sources of capital for the project and have secured fixed-cost contracts for all the major construction components. We are confident that our expected $900 million equity investment required for this remarkable project will produce stable and growing returns for our unitholders for many years to come,” said Hofstedter.
The REIT said it was satisfied that it has the capital required to successfully complete construction of The Bow.
“The agreement with EnCana provides for a phased occupancy with the first tranche available in 2011, and full occupancy to occur in 2012,” it said.
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