CAI Investments has secured $100 million through Parkview Financial to reposition Harrah's Reno Hotel and Casino into Reno City Center, a mixed-use property with 528 apartment units and 250,000 square feet of office and retail space. The property is located in an opportunity zone, and completion is scheduled for the summer 2022. In addition to securing debt through Parkview, CAI secured equity through Gryphon Private Wealth Management's opportunity zone fund.
"Reno is a great multifamily market with huge supply constraints," Paul Rahimian, CEO and founder of Parkview Financial about why this was an attractive deal for the firm. "Workers in the region are literally living in old hotel rooms, RVs and even in their cars while they look for apartments to rent. This loan will reposition the old Harrah's hotel that was dilapidated and obsolete into more than 500 new apartment units. The demand for this product is huge."
The location and the quality of the sponsor also supported Parkview's bullishness on the deal. "The location is superior in that it is the main-and-main of Reno, located directly in the heart of downtown," says Rahimian. "The sponsorship behind the project is a seasoned group with vast experience and a healthy equity infusion. Everything about this deal made sense from the minute it was offered to us."
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This deal is squarely in line with Parkview's 2021 strategy, which will target multifamily construction loans. "This is directly in-line with our focus on multifamily construction loans," says Rahimian. "More than 90% of our loan closings in 2020 were in the multifamily sector and we believe that trend will continue this year."
Following the deterioration of the hotel market in 2020 as a result of the pandemic, hotel conversion projects are likely to become more common. "The conversion of hotel to multifamily use has always been a possibility, however, the pandemic made it a logical reality," says Rahimian. "We have seen numerous similar deals like this one and believe in this type of repositioning. We will see more and more repositioned hospitality and retail assets to multifamily with other mixed-use elements as supporting amenities."
After a brief pause in the capital markets last year, Rahimian says that the market has rebounded. "Capital is pouring in at record rates," he says. "After taking a pause at the onset of COVID, investor capital appetite has increased. Currently we are queuing the capital coming in to make sure we can safely put it to work before taking it in. As a benchmark, our investor equity increased by over 40% in 2020. We are seeing the same type of demand in 2021."
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Kelsi Maree Borland
