Hotel Gets $15.2M in Financing

BOSTON-A new 112-room hotel located in the heart of downtown has secured financing. Corus Bank closed on a $15.2-million loan to finance the Kimpton affiliated/managed hotel at 155 Portland St. The hotel is being developed by Portland Street Hotel Inc.

Nailing down financing for a hotel project has always been tricky but in the post-9/11 recession world it’s gotten even tougher. A number of hotel projects in the area–most notably the 1,120-room headquarters hotel being built by Starwood Hotels & Resorts Worldwide on the South Boston waterfront right near the new convention center–have had trouble financing their projects.

While Christopher Barkidjija, commercial loan officer at Corus, acknowledges the reality of the current climate for hotel financing, he tells GlobeSt.com that this deal had a number of elements that convinced the bank to invest. “Frankly, the developer was able to get us comfortable with the equity players,” he says. “Also, we are active in hotel construction lending and Kimpton is a well-known boutique hotel.” Barkidjija adds that the hotel’s location, in a major metropolitan area, also made the project attractive.

David Leatherwood, president of Portland Street Hotel, a Vermont-based company, emphasizes that the bank’s “team” approach to the lending process helped ensure the success of the deal. “Throughout the process I always felt that our interests were mutually aligned,” he says.

Corus Bank worked with Portland Street to structure its loan to incorporate partial recourse as well as allow for a mezzanine loan by another lender. Corus stresses that it is continuing to work with hotel developers looking to build hotels in major metropolitan areas.

Corus Bank is a subsidiary of Corus Bankshares, a one-bank holding company headquartered in Chicago. The bank specializes in condominium, hotel, office and apartment loans. Its outstanding commercial real estate loans and construction commitments are approximately $2 billion.

According to Barkidjija, San Francisco-based Kimpton is in the process of developing a hotel in Cambridge. The company’s east coast presence is rounded out with three hotels in Washington DC. Kimpton also has 18 hotels in San Francisco and one each in New Orleans, Salt Lake City, Silicon Valley, Aspen and Denver. Its hotel portfolio also includes properties in Tacoma, WA, Portland, Seattle and Chicago.