PORTLAND, OR—CRE banking firm George Smith Partners, Los Angeles, has lined up $38.9 million in construction financing on behalf of its client, Salpare Bay, LLC., for the development of Phase I of The Residences at Yacht Harbor. The 373-unit waterfront Class A multifamily property is located at 11505 North Yacht Harbor Drive in Portland. Principal, Malcolm Davies was assisted by George Smith Partners' assistant VP Peter Kleinberg and analyst Drew Sandler.

“This property is positioned to become the premier waterfront, Class A, apartment community in Portland,” said Davies, who noted that the community will be located along the most valuable yacht harborage in Portland, Salpare Bay Marina.  Salpare Bay is a 95% occupied marina which features 204 yacht slips.

  “Unlike many developments seeking construction financing, this property was shovel-ready, with no entitlement risks to the lenders,” said Davies. “This is especially rare for the riverfront area of Portland, where there are several barriers to entry developers face during the entitlement process.  The fact that this parcel was already zoned, fully-entitled, and land use permit-ready for the development of The Residences at Yacht Harbor made this a very attractive and unusual investment opportunity in this market.”

Davies also noted that market conditions contributed to the success of this transaction.

“The Portland real estate market is going strong; vacancy rates in the market are currently the lowest in the country, at only 2.2%.  We were able to demonstrate that strength, as well as this property's excellent potential for profit, to potential lenders in order to secure this financing,” he explained. 

Portland is also a supply-constrained market, according to Davies, who notes that fewer than 100 rental units were brought to the market last year.

“The combination of low vacancy and little new supply means there is substantial potential for high rental demand,” noted Davies.  “These factors made this investment a secure one, despite the volatility of the overall real estate market in recent years.”

According to Davies, the $38.9 million construction financing closed with a 10% repayment guarantee from the client. With financing now in place for Phase I, the developer expects to begin construction by the end of May.

The Residences at Yacht Harbor will be built on 25.13 acres, and will include a total of four buildings and 373 units, with a low density of less than 15 units per acre. The apartment community's units will range in size from 950 to 1,455 square feet, with one-, two- and three-bedroom units.

The multifamily community will feature luxury amenities such as a private beach, clubhouse, media room, business center, wine tasting bar, fitness center, massage room and picnic area with walking path.  Individual units will feature private decks or patios, gas fireplaces, hardwood floors and granite counter tops.

George Smith Partners is a leading national real estate investment banking firm that specializes in arranging financing for commercial and multifamily properties, including acquisition, construction, bridge and permanent loans, as well as mezzanine loans, highly leveraged participating loans and joint venture equity.  They have arranged over $10 billion of financing in the last 10 years.