Interstate expansion has brought Arkansas banks into new metropolitan markets and taken construction loan opportunities to new heights, both financially and literally.
Mixed-use skyscrapers in Chicago and New York are approaching the 1,000-feet mark for Little Rock’s Bank OZK, adding to its resume of notable funding deals.
“You could bounce around the country and see some pretty awesome projects that we’ve helped finance,” said Brannon Hamblen, president of the bank’s Real Estate Specialties Group in Dallas. “We have low leverage loans with marquee sponsors on marquee projects in great markets.”
Two other major Arkansas banks — Simmons Bank of Pine Bluff and Arvest Bank of Fayetteville — have made their own big commercial loans in markets including Nashville, Tennessee, Phoenix and Atlanta.
Bank OZK provided a $475 million senior loan in the $735 million financial package supporting construction of the One Chicago project by the windy city’s JDL Development.
The two-tower development, which will be completed later this year, features 735 apartments, 77 condos, 51,000 SF of office space and more than 200,000 SF divided among a Life Time athletic resort and spa, Whole Foods Market and restaurant.
Hamblen indicates the 971-feet ride up an exterior elevator of the tallest tower might be the most daunting aspect of his involvement with the Chicago project. His empowering advice to cope with the pucker factor of the ascent: Just look out at the view, don’t look down.
The 76-story east tower, touted as the sixth-tallest building in Chicago, and the 49-story west tower have about 2.2 million SF under roof.
Secondary financing and investment for One Chicago flowed through New York’s Square Mile Capital Management and Wanxiang America Real Estate Group, a division of the Wanxiang America Chinese auto-parts corporation.
Last month, Bank OZK provided a $410 million senior loan in the $540 million financial package for construction of 520 Fifth Ave. At 995 feet, the 450,000-SF Midtown Manhattan project will be second only to the Empire State Building among Fifth Avenue high-rises.
“The loans we make are very high profile, and they are large for sure as well,” said Hamblen, a 13-year veteran with RESG. “One of the most recent loans we’ve closed is an $800 million loan on a condo project in New York with Extell Development.”
That February loan is the RESG’s largest to date and the lion’s share of the $967 million construction financing for the 69-story, 127-unit 50 West 66th Street project on the Upper West Side of Manhattan across from Central Park.
Before last month’s Extell funding, the largest loan by the Bank OZK group was $664 million in September 2019 for the opening round of construction of Water Street Tampa.
The bank is the sole senior secured lender on pieces of the first-phase construction at the 50-acre mixed-use development, pieces that will eventually tally more than $3 billion and encompass 9 million SF.
Bank OZK’s funding is tied to several towers with 1,318 apartments, 37 luxury condos, 691 hotel rooms, nearly 500,000 SF of office space, 171,000 SF of retail space, a mammoth parking garage and more. Included in that list is Tampa’s first five-star hotel, The Tampa Edition. The 172-room hospitality destination and the 519-room JW Marriott Tampa Water Street are both 26-story properties.
“This project is changing the skyline of Tampa,” Hamblen said.
The monied interests behind Strategic Property Partners, the developer of Water Street Tampa, include Jeff Vinik, owner of the Tampa Bay Lightning hockey franchise, and Microsoft’s Bill Gates through his Cascade Investment fund.
The Water Street Tampa funding topped a 2018 Bank OZK loan of nearly $558 million that put in motion another Florida development, The Estates at Acqualina in Sunny Isles Beach north of Miami.
The 246-unit luxury condo project in twin 52-story towers is developed by Trump Capital Group, led by Jules and Eddie Trump.
“At Bank OZK, we’re just thrilled to do some of these projects and make the loans we make,” Hamblen said.
Simmons Bank’s Tennessee moves led to its $47.8 million construction loan of the 14-story Virgin Hotels Nashville. The 262-room project on Music Row, which opened in the COVID-tainted summer of 2020, is developed by British billionaire Richard Branson’s Virgin Group Ltd.
“The space we play in nationally and regionally is somewhere in the $50 million-$75 million range,” said Matt Reddin, chief banking officer at Pine Bluff’s Simmons Bank.
Arvest Follows Client
The $26.7 billion-asset Arvest Bank typically doesn’t stray outside of Arkansas, Oklahoma, Missouri and Kansas to make construction loans.
But the largest lender headquartered in Arkansas is helping finance significant projects in Atlanta and Phoenix.
The involvement of JE Dunn Capital Partners of Kansas City, Missouri, in the two projects led to Arvest participating as the lead lender in both deals.
“We really don’t chase out-of-market lending opportunities,” said Clay Sublett, senior vice president who works out of Arvest’s Mission, Kansas, office. “The borrower or property has to be in our four-state footprint.”
A $65 million construction loan is backing Reflection, a 25-story, 742-bed student housing project. Scheduled for completion this summer, Reflection caters to the largest collegiate draw in downtown Atlanta: Georgia State University.
The developers of the $87 million overall project are a partnership of Atlantic Capital Properties and Gateway Ventures, two Atlanta firms.
A $72 million construction loan is funding the 811 North Third project in Phoenix. The build-out of the 24-story, 326-unit apartment tower should be completed next year. The developer is Lincoln Ventures of Austin, Texas.
Arvest has a $90 million construction loan simmering that is expected to close by this summer. The funding will back the multi-sport complex component of the sprawling mixed-used BluHawk development in Overland Park, Kansas.
Arvest is the pending lead lender on the project that will produce phase one amenities of an indoor turf field, NCAA-regulation ice rink, four hardwood basketball courts, eight volleyball courts, a sports performance training center and more.
“We’ll look at transactions of varying sizes and when it gets larger than our comfort level we’ll put together a group of lenders,” Sublett said.