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Newsroom
8/11/2009
The developers of the 36-story W Austin hotel and condo project, currently under construction across from City Hall are looking for a new bank to provide a construction loan. Stratus Properties CEO Beau Armstrong says they have known for some time that Corus Bank NA, which was to finance around half of the 300 million dollar project, has been in trouble.
Below is a release from Stratus:
W Austin Hotel & Residences. As previously announced, in May 2008, Stratus entered into a joint venture with
Canyon-Johnson Urban Fund II, L.P. (Canyon-Johnson) for the development of the W Austin Hotel &
Residences in downtown Austin. Stratus, the manager of the project, has an approximate 40 percent interest in
the joint venture and Canyon-Johnson has an approximate 60 percent interest in the joint venture. As of June
30, 2009, capital contributions totaled $35.3 million for Stratus and $48.7 million for Canyon-Johnson. For the
remaining capital contributions, Stratus will fund 40 percent and Canyon-Johnson will fund 60 percent of
project costs until the required capital contributions totaling approximately $128 million are made, after which
project costs originally were expected to be funded by construction financing borrowings (see below).
The joint venture originally obtained a $165 million construction loan with Corus Bank, N.A. (Corus) to finance
project costs after the required capital contributions were made. On June 26, 2009, the loan agreement with
Corus was assigned to a subsidiary of Stratus, which is jointly managed by Stratus and Canyon-Johnson, in
exchange for a pay down of $250,000 of the outstanding principal balance of $2.1 million. As a result, Corus is
no longer the lender and in the second quarter of 2009 Stratus recognized a $0.2 million loss on
extinguishment of debt, which includes the write-off of unamortized deferred loan costs in the amount of $2.1
million.
The joint venture is aggressively pursuing other options for financing the future construction costs of the W
Austin Hotel & Residences project after the required capital contributions are made. Such options may include
additional equity contributions by Stratus and Canyon-Johnson, financing from other financial institutions,
admitting new equity partners, or a combination of these alternatives. If the joint venture does not secure
project financing from a third-party lender, or if Stratus or Canyon-Johnson is unable to make required
additional future capital contributions to the joint venture, the joint venture may be required to delay further
construction of the project until additional financing is available.
Stratus is a diversified real estate company engaged in the acquisition, development, management, operations
and sale of commercial, multi-family and residential real estate properties located primarily in the Austin, Texas
area.
www.stratusproperties.com.
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