Berkadia Tapped to Seek $650M for San Diego Project
- Oct 17, 2017
A joint venture led by Manchester Financial Group tapped Berkadia Hotels and Hospitality to source a $650 million construction loan for the $1.3 billion Manchester Pacific Gateway project located on San Diego’s waterfront.
The 12-acre downtown bayside site reportedly is the largest undeveloped urban waterfront site on California’s coast and will eventually encompass 2.8 million square feet of hotel, office and retail space. The location is bounded by Broadway, Harbor Drive and Pacific Highway and is adjacent to the U.S.S. Midway Museum. A 1.9-acre public park will face North San Diego Bay.
Berkadia’s Hotels and Hospitality group has the task of sourcing a 50 percent LTC non-recourse construction loan that will close by the end of this year. Berkadia Senior Managing Director Andrew Coleman and Managing Director Jackson Cloak will lead that effort.
As of press time, Berkadia had not responded to Commercial Property Executive’s request for additional information.
Fight for the right to build
The eight-city-block site had belonged to the U.S. Navy since 1920, and by the 1980s the Navy wanted a new regional headquarters, but couldn’t get Congress to appropriate the money. The then U.S. Representative, Bill Lowery, won approval for the Navy to grant the majority of the site to a developer, in exchange for a new Class A building for the Navy as part of the project and at no cost to taxpayers, according to the San Diego Union-Tribune.
The developer negotiated a 99-year lease from the Navy in 2006, but it took 11 years, and multiple court battles, including one that landed in the 9th Circuit Court of Appeals in 2016, before the project could move forward. Demolition of the Navy Broadway Complex began in early April and was slated to cost about $4.5 million, the Union-Tribune reported at that time.
Convention center hotels are among Manchester’s specialties. The company has developed the Manchester Grand Hyatt San Diego (a block from the Manchester Pacific Gateway site) and the 1,360-key San Diego Marriott Marquis & Marina, and is currently building the 1,066-key Fairmont convention hotel in Austin, Texas.
Driven by international trade, biotech, the U.S. military and tourism, the San Diego economy also benefits from a deep talent pool, based in part on the area’s universities and research institutions.