SAN DIEGO – The new 317-room Pendry San Diego has received $95 million in construction financing. The Montage-branded hotel will be located on 5th and J streets in Downtown San Diego’s Gaslamp Quarter.
The hotel will be situated three blocks from the San Diego Convention Center. Pendry San Diego will mark the launch of the new Pendry hotel brand.
The development site originally housed a condemned cigar store and parking lot. It was initially considered by another developer as the site for a new Marriott Renaissance hotel. Interest waned during the recession, however, and an eminent domain issue emerged with the site’s former cigar shop owner, according to Malcolm Davies of George Smith Partners, which arranged the construction loan.
The Pendry San Diego will be a 12-story hotel with several restaurants and bars, an outdoor pool, spa, grill, fitness area, ballroom and various meeting rooms. It is scheduled for completion in summer 2016.
Davies also notes the development partners were seeking financing that would provide 70 percent of the proceeds necessary for the construction of this luxury hotel.
The non-recourse financing features a 36-month term. The capital stack includes both debt and equity. The structure allows the loan to subordinate to new financing even if that financing does not compensate for the entire construction loan.