JMI Realty Inc., the master developer for the $1 billion Padres ballpark redevelopment project in the East Village section of Downtown, said it obtained financing for the 512-room Westin Hotel next to the ballpark and will break ground later this month.
The development entity controlled by Padres owner John Moores said it has agreements with two major money center banks to provide $104 million for the 33-story hotel, one of three hotels the Padres agreed to erect as part of the overall commercial development in the 26-block ballpark district.
The lenders are Bank One, based in Chicago with some $270 billion in assets, and Westdeutsche Landesbank Girozentrale (WestLB), said to be Germany's fourth-largest bank with about $187 billion in assets.
"Both of these banks were big enough and sophisticated enough to know what they were looking at and realize it was among the best of the best (projects)," said John Kratzer, JMI Realty's president and CEO.
"This hotel will provide the city with four-star lodging accommodations in a market where conditions are among the best in the country and where the supply of rooms falls well short of the demand that will be created by the Convention Center expansion."
Kratzer said the center expansion that doubles the exhibition space of the existing facility and is scheduled to open in about a year is the real driver behind the construction of several planned hotels Downtown, not the ballpark.
In addition to the Westin's 512 rooms, the project includes some 34 luxury condominiums on the top 11 floors. The number of condos keeps changing as committed buyers combine two separate units into one, Kratzer said.
The Westin's estimated construction price is $148 million. The remaining $44 million is being provided by JMI's equity in the project.
However positive the Westin Hotel announcement may be, it must be tempered with a six-month delay in constructing a 750-room Hyatt Regency expansion, just north of the Convention Center. San Diego-based Manchester Resorts is said to be close to obtaining a $300 million financing package that involves the refinance of the existing Hyatt, as well as money for the new tower.
Then there is the 1,200-room hotel planned south of the Convention Center expansion at the Campbell Shipyard site, also being developed by Manchester, which is at least two years away from its financing and groundbreaking.
The hotels are needed to serve the burgeoning convention business that's expected when the expansion opens in September 2001, but are also necessary to generate the hotel room taxes to repay an estimated $21 million annual debt service for bonds the city plans to issue to pay for its share of the $450 million ballpark.
The privately financed Westin on L Street between Sixth and Seventh avenues is the first of three hotels the Padres promised to build as part of its 1998 agreement with the city and approved by voters. JMI said it is now building about 950 rooms in the ballpark district, about 100 more than promised.
A 203-room AmeriSuites Hotel has yet to be financed, but groundbreaking is planned sometime early 2001, while a 238-room boutique hotel is more than a year away from construction, Kratzer said.
Besides hotels, JMI is the lead developer for several office buildings, retail shops and residential units in the district with a total estimated value of nearly $600 million, Kratzer said.
All the planned private development may all be for naught, said Bruce Henderson, who has several lawsuits pending in the courts challenging the city on its ballpark decisions.
"The timing of all this is very suspicious," Henderson said. "The Padres are desperate to create the impression that it's business as usual, that everything is going forward and there aren't any problems. But we know there is an investigation going on."
He referred to an ongoing probe by the FBI of the entire City Council following revelations Councilwoman Valerie Stallings invested in and took a profit on the sale of stock of a public company chaired by Moores.
The criminal investigation has cast a pall over all the council's decisions on the ballpark, and effectively prevented the city from issuing up to $299 million in tax-free bonds.
To get the project under way until the bonds can be issued, the city and the Padres put together a $30 million interim financing package that is expected to fund the project through this fall.