LONG BRANCH, NJ-In early spring, Ocean Place Development LLC announced plans to renovate and expand the 254-key Ocean Place Conference Resort and to develop an adjacent four-acre parcel with mixed uses. Now, the group has the funding in place to start that process. Ocean Place Development, a partnership of principals of the San Francisco-based Tiburon Capital Corp. and the Washington, DC-based Orr Partners, has secured a $50-million bridge loan from an unnamed international investment bank.
According to Benjamin L. Kadish, managing director of the Chicago-based Prairie Realty Advisors, which arranged the deal, the first mortgage was underwritten using the hotel's collateral value and the development rights to the proposed MXD next door, a project that would consist of condos, a retail component, plus additional commercial space and a parking structure. "Funding for the pre-development costs is included in the loan's structure, in addition to an interest reserve for the seasonality of the hotel operations, as it serves as a resort destination hotel in the summer months.
"The loan has been structured at a non-recourse floating rate, and will allow the developers to proceed with the development plan for the entire site," Kadish says. "Interest rate protection was negotiated as part of the financing structure."
As reported by GlobeSt.com, Tiburon announced in late March a plan to both expand the asset with a second hotel tower on the 12.5-acre oceanfront site, and to build out the adjacent site with as much as one million sf of MXD space. Officials of Tiburon and Orr outlined a general plan that, pending approvals, would have work starting within the next 18 months. Tiburon bought the property and the adjacent development rights from Gem Holding Inc. in 2000 and earlier this year brought Orr Partners into the project.
Originally built as the Ocean Place Hilton Hotel in the 1980s, the property also includes a spa and more than 40,000 sf of meeting space. In 2005, Tiburon's principals, then known as Tiburon Ocean Place LLC before bringing Orr into the mix, hired West Pace Hotel Group to manage the asset. West Pace is headed by Horst Schulze, formerly with Ritz Carlton.
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