hen Wave Crest Resorts broke ground on the eight-acre Hilton Carlsbad Oceanfront Resort and Spa recently, there were many reasons to celebrate.
For Wave Crest owner Bill Canepa, it marked the culmination of a nine-year dream to develop a full-service resort on the edge of the Pacific Ocean.
For the City of Carlsbad, it was the first step in the realization of a vision for the Ponto area, an underutilized stretch of beachfront land nestled between Carlsbad Boulevard and the Batiquitos Lagoon.
When completed, the Hilton Carlsbad Oceanfront Resort and Spa will feature 215 resort rooms, 7,500 square feet of ballroom and meeting space, an ocean view restaurant, named for hotel partner Jeff Chandler, and a 5,000 square-foot day spa.
Carlsbad will get an extension of the linear park and pedestrian improvements that run along the east side of Carlsbad Boulevard, and more than $1 million a year in tax and license income from hotel operations. That's on top of property taxes. These will provide important new revenue the city needs to continue to provide high-quality services like police and fire protection, libraries, and park & recreation programs.
In addition to these very tangible benefits, the project has a symbolic importance to the city, the first major hotel development to break ground since the beginning of the recession.
Alan Reay, president of Atlas Hospitality Group, said it was unprecedented that Canepa's team secured financing at the level it did when so many hotels are in foreclosure, scaring lenders off.
Wave Crest secured $60 million in financing for its $75 million project from UBS Realty Investors. “For Bill Canepa to get this level of financing speaks volumes for him and his track record, for the location, Carlsbad, for the brand, Hilton, and quality of the asset,” said Reay, a hotel broker with an expertise in Southern California.
“Typically if you're able to get financing it's 50 percent of the value. If Wave Crest obtained a $60 million loan on $75 million, that's 80 percent, and that's unheard of anywhere in the country,” Reay added. “I think we can draw from that that the appraisal for the finished asset is considerably stronger than the construction value, maybe in excess of $100 million.”
At one point during finance negotiations, the lender wanted assurances from Wave Crest regarding approvals, so the city brought together its Business Assistance Team to meet directly with the lender and explain that the project was assured of obtaining all its final approvals and permits.
It is not typical for the city to meet directly with a private lender, but this is a big project for Carlsbad and it's tough to get hotel financing, so it was appropriate for the city to do everything we could to let them know everything was on track.
City officials who shepherded this project are happy to see Canepa and his team stand on the threshold of realizing their dream.
In a conversation, Canepa said the project has been through a lot, starting with the terrorist attack on the World Trade Center on Sept. 11, 2001, only weeks after he opened escrow on the property. That event changed everything, including the hospitality industry.
Canepa also suffered a personal loss, the death of his beloved son, Sean, who was closely following the project.
Canepa said that he didn't let such events interfere with his vision, and he's dedicated the project to his son's memory.
“I'm excited we can be part of that catalyst for Ponto,” he said. “When I look back on it, we made so many changes to the project during the years, maybe not in looks, but how it will operate, it will be better.”
It's a project that will make Carlsbad proud.
For Wave Crest owner Bill Canepa, it marked the culmination of a nine-year dream to develop a full-service resort on the edge of the Pacific Ocean.
For the City of Carlsbad, it was the first step in the realization of a vision for the Ponto area, an underutilized stretch of beachfront land nestled between Carlsbad Boulevard and the Batiquitos Lagoon.
When completed, the Hilton Carlsbad Oceanfront Resort and Spa will feature 215 resort rooms, 7,500 square feet of ballroom and meeting space, an ocean view restaurant, named for hotel partner Jeff Chandler, and a 5,000 square-foot day spa.
Carlsbad will get an extension of the linear park and pedestrian improvements that run along the east side of Carlsbad Boulevard, and more than $1 million a year in tax and license income from hotel operations. That's on top of property taxes. These will provide important new revenue the city needs to continue to provide high-quality services like police and fire protection, libraries, and park & recreation programs.
In addition to these very tangible benefits, the project has a symbolic importance to the city, the first major hotel development to break ground since the beginning of the recession.
Alan Reay, president of Atlas Hospitality Group, said it was unprecedented that Canepa's team secured financing at the level it did when so many hotels are in foreclosure, scaring lenders off.
Wave Crest secured $60 million in financing for its $75 million project from UBS Realty Investors. “For Bill Canepa to get this level of financing speaks volumes for him and his track record, for the location, Carlsbad, for the brand, Hilton, and quality of the asset,” said Reay, a hotel broker with an expertise in Southern California.
“Typically if you're able to get financing it's 50 percent of the value. If Wave Crest obtained a $60 million loan on $75 million, that's 80 percent, and that's unheard of anywhere in the country,” Reay added. “I think we can draw from that that the appraisal for the finished asset is considerably stronger than the construction value, maybe in excess of $100 million.”
At one point during finance negotiations, the lender wanted assurances from Wave Crest regarding approvals, so the city brought together its Business Assistance Team to meet directly with the lender and explain that the project was assured of obtaining all its final approvals and permits.
It is not typical for the city to meet directly with a private lender, but this is a big project for Carlsbad and it's tough to get hotel financing, so it was appropriate for the city to do everything we could to let them know everything was on track.
City officials who shepherded this project are happy to see Canepa and his team stand on the threshold of realizing their dream.
In a conversation, Canepa said the project has been through a lot, starting with the terrorist attack on the World Trade Center on Sept. 11, 2001, only weeks after he opened escrow on the property. That event changed everything, including the hospitality industry.
Canepa also suffered a personal loss, the death of his beloved son, Sean, who was closely following the project.
Canepa said that he didn't let such events interfere with his vision, and he's dedicated the project to his son's memory.
“I'm excited we can be part of that catalyst for Ponto,” he said. “When I look back on it, we made so many changes to the project during the years, maybe not in looks, but how it will operate, it will be better.”
It's a project that will make Carlsbad proud.