Dealmaker: George Smith Partners Places $460M Construction Loan

July 16, 2019

George Smith Partners, Los Angeles, placed $460 million in senior construction financing for a one-million-square-foot Portland, Ore. mixed-use development.

A Mosaic Real Estate Investors affiliate provided BPM Real Estate Group with $460 million for 35-story Block 216, which will encompass a full block in Portland’s central business district. Block 216 will incorporate several uses including 160,000 square feet of Class A office space, a 251-key Ritz Carlton Hotel–the first five-star hotel in Portland–138 Ritz Carlton-branded residences and 7,800 square feet of ground level retail that will open up to a pedestrian mall.

With the financing in place, Portland-based BPM will break ground this summer with a 2023 estimated delivery date.

“The high-leverage loan request, in and of itself, made this a very complex financing,” said Mosaic Managing Director and Head of Origination Alex Ovalle. “It was made even more complicated given that it is also the first development of its kind in Portland to offer this mix of uses.”

Ovalle said the valuation of each separate components and the strength of sponsorship led Mosaic to fund the four-year construction loan. The firm has originated nearly $800 million in construction financing on hospitality and resort projects since Jan. 1. Most recently, Mosaic provided Santa Monica, Calif.-based developer Columbus Pacific with $165 million in senior construction debt to develop a 233-key luxury condo hotel in Park City, Utah.

The financing opportunity went to market in late February, said George Smith Partners Principal and Managing Director Malcolm Davies, who arranged the financing with GSP Senior Vice President Zachary Streit.

“We recognized that due to the size and complexity of this project, we were going to focus on groups that would have the ability to finance a project of this scale,” Davies said. “We cast our net to a variety of capital providers that included construction, mezzanine and ‘stretch’ (senior and mezzanine combined) lenders.”