A seasoned California developer is seeking approximately $200 million in construction funds to build a seaside resort with a hotel and rental bungalows in Montecito, Calif., near Santa Barbara, Mortgage Observer has learned.
Caruso Affiliated, the Los Angeles-based developer of malls like The Grove and The Americana in Southern California, bought the property where it plans to build The Miramar Beach Resort & Bungalows, in 2006, according to reports. The developer’s plans were later shelved, when the recession hit and construction funds dried up.
Now, plans are back on, Rick Caruso, CEO of the eponymous firm, told Mortgage Observer today. He is “in the very early stages,” of construction at the building, and currently seeking “about $200 million,” likely from a syndicate of banks, due to the size of the loan.
“We have relied on PNC, J.P. Morgan, Bank of America and Wells Fargo,” in the past, Mr. Caruso said. He added that he also hopes to splice in funds from smaller banks, such as East West Bank or First Republic Bank.
The project will rise on 16 acres in celebrity-studded Montecito, on the site of the former Miramar By The Sea Hotel, according to published reports. The finished resort will have 186 keys and numerous pools, as well as private beachfront.
The project was approved in 2008, but delayed further after the local planning commission asked for numerous changes to the plan and some residents sued, reports show. In March 2012, Caruso received a one-year extension to start the project, according to documents filed with the Santa Barbara Board of Supervisors.
Demolition of the existing hotel began in 2013. The project is all new construction, Mr. Caruso confirmed.
Caruso’s other projects in the area include the Paseo Nuevo, an outdoor shopping mall in Santa Barbara, which opened in 1990.
Following his usual approach to financing, Mr. Caruso plans do a “take-out” of the construction funds later, likely from a life company.
“I like life companies because I like the relationship,” he said. “Having a long-term relationship is great.”
In January, Caruso took out permanent financing on 8500 Burton Way from MetLife, to replace the construction funding on the Beverly Hills residential rental project, Mr. Caruso said.
Overall Caruso’s approach to finance is very straightforward, Mr. Caruso said. “We have not used mezz. No ‘tricky’ financing,” he said.