W Hotel still on schedule with new financing from Nevada bank

The construction of the W Hotel and Residences across the street from City Hall is proceeding on schedule, according to Stratus Properties’ CEO Beau Armstrong, with phase one set for completion in December 2010.

 

Stratus, the real estate and development company behind the $300 million mixed-use hotel, condo and retail project downtown, ran into trouble with the project in September when its bank, Chicago-based Corus Bank NA, failed.

 

But last month Stratus and its partner, the Canyon-Johnson Urban Funds, announced it had found replacement financing through Beal Bank Nevada, which is providing $120 million construction loan for the development. According to Armstrong, it’s the only construction loan Beal has done in the last 15 years.

 

“I can’t think of another instance where a project that was under construction, lost its funding and found new financing in the recent financial crisis,” Armstrong said. “I think it’s a real reflection not only on the project but also on Austin.”

 

The refinancing leaves about $52 million for Stratus and Canyon-Johnson to come up with on their own by spring 2010. Armstrong says between Stratus and Canyon they are able to fund that amount, “but we have been in the market looking to sell some preferred equity to somebody.”

 

Phase one of the project includes the hotel and a live music venue and studio for KLRU-TV’s Austin City Limits. The lower-story condos will be finished first, with openings beginning in Jan. 2011 and the last of them completed by May 2011. According to Armstrong, the condos are now about 50 percent pre-sold and he expects to have them all sold by the time they complete the last units.

 

“There’s this misconception that there’s this huge glut of condos in Austin,” Armstrong said. “And while that’s certainly true in Miami and Phoenix and Las Vegas, in Austin—between the W, the Four Seasons, the Spring and the Austonian—there are only about 400 units of unsold inventory. So it’s just not that much.”

 

The W Hotel and Residences, a 37-floor building at 2nd Street and Lavaca, will have 252 hotel rooms and suites, including about 159 residential units on floors 18 to 37 with views of Lady Bird Lake and the city skyline. The W will also have an elevated garden with a swimming pool and bar, a spa, and approximately 54,000 square feet of retail and office space.