SEATTLE An investor group led by Jolene and Bruce McCaw has completed a financial restructuring of Four Seasons Hotel and Private Residences Seattle that resolves its major hurdles and sets the luxury development on firmer financial footing.
“The cloud over this project has lifted. Working closely together, our partners have created a great global solution to Four Seasons Seattle’s financial challenges,” Bruce McCaw says. “This landmark development is solidly back on track, giving our guests, residents, prospective residents, the local real estate market and Seattle community confidence that Four Seasons Seattle is positioned as the preeminent luxury address in downtown Seattle.”
The US$180 million project opened in the fall of 2008, just as Seattle’s real estate market started to tumble. The project went into default a year later in December 2009, unable to meet the terms of its previous loans. The project faced possible foreclosure or bankruptcy—an untenable prospect to the investors, which include a number of prominent Seattle families and residents at Four Seasons Private Residences Seattle.
“To protect and preserve this true Seattle icon, our investor group remained firmly supportive throughout this lengthy process, and we all worked very hard to reach a great solution for the Four Seasons Seattle investors, homeowners, contractors and lender,” McCaw says.
Under the restructuring announced today, affiliates of Seattle Hotel Group LLC, owner of Four Seasons Hotel and Private Residences Seattle, invested additional funds and negotiated new terms with its construction lender, Seattle-based Washington Real Estate Holdings LLC, which has agreed to extend the senior debt on terms and rate more closely resembling conventional first mortgage debt.
“As a local company, we wanted to ensure the long-term success of this great property, and we’re proud to be a partner in the solution,” says Craig Wrench, president and CEO of Washington Real Estate Holdings.” This puts an end to the uncertainty that’s been swirling around this project.”
The investor team also settled a lawsuit brought by building contractor Lease Crutcher Lewis and liens against the property by Lease Crutcher Lewis and its subcontractors. Terms of the settlement were not disclosed.
“Everyone gave up something, which was challenging, but ultimately this is a reasonable outcome for all parties,” says Bill Lewis, president and CEO of Lease Crutcher and an investor in the property. “This is a great project that opened at a challenging time in the market. This restructuring solution is good for the project and good for Seattle’s real estate market.”
The McCaws will lead a new ownership management board that will control the development. Original managers John Oppenheimer, Tom Alberg and Paul Schell support this management transition plan and remain investors. In addition, Alberg will participate in the new management board. Substantial financial reserves are in place to meet loan payments, homeowner association dues, capital improvements and similar expenses going forward.
The 147 guestrooms and 36 private residences at Four Seasons Hotel and Private Residences Seattle are situated in the cultural and business heart of downtown, steps from Pike Place Market, Seattle Art Museum and the city’s best shopping, dining and entertainment venues.
Residents of the private residences have access to 24-hour dedicated residential concierge service, valet parking, 24-hour room service and the hotel’s full spectrum of amenities and services. The private residences range from 1,300 sq. ft. to more than 7,500 sq. ft. and are priced between US$1.5 million to more than US$10 million. To date, 25 of the 36 private residences have been sold, closed and occupied. Realogics Sotheby’s International Realty is selling the remaining residences.