Bank of the West is the lender behind a $49.85 million construction loan on the development of the Residence Inn by Marriott Silicon Valley, Real Estate Capital has learned.
The bank provided the three-year, floating-rate loan with two one-year extensions to R.D. Olson Development, in the first deal the two firms have done together. HFF arranged the deal.
The loan will go towards developing a four-story, 204-room hotel with 1,500 sq ft of meeting space, with amenities including fitness center, a spa, outdoor pool and patios.
Located in San Carlos, California, an affluent Silicon Valley suburb halfway between San Francisco and San Jose, the hotel will sit on a 3.92-acre site alongside Highway 101. Construction is slated for completion in 2017.
Earlier this month, R.D. Olson Development broke ground on another California hotel, a $120 million Irvine Spectrum Marriott at 7905 Gateway in Irvine, California near Los Angeles. The developer specializes in hospitality properties nation-wide and has developed more than $1 billion dollars in hotel assets since 2000.
Bank of the West is a financial services company that provides wide range of personal, commercial, wealth management and international banking services with $75.7 billion in assets as of December 31, 2015. “We work closely with real estate developers and real estate investors to provide interim construction financing as well as bridge and term financing,” said a Bank of the West spokesperson. The bank is based in California and was founded in 1874.
This loan comes a month after Fitch Ratings and Kroll Bond Ratings Agency (KBRA) issued reports warning that the hospitality real estate market might be overheating.
There were 469,000 hotel rooms in the construction pipeline at the end of 2015, a 13.6 percent increase over the prior year and the highest level since 2009, according to KBRA. But the agency noted that “demand growth is tapering off as both local and global political and financial volatility has become more apparent in the latter half of 2015 and into 2016. And Fitch stated that the lodging industry was the only major asset class that was “peaking.”
The developer did not respond to request for comment in time for publication.