Urban Partners’ Paul Keller Explains Financial Woes To City Council
Burien City Council members were told in a cautiously optimistic “bottom-line” update Monday night (May 24) that residential units in the mostly vacant, six-story Town Square condominium/retail complex could be selling later this year.
“This city and community will see the project sold out sometime in the future,” said Paul Keller (pictured, left), managing partner of Urban Partners, Burien’s private developer for the Town Square project. “I don’t think it will be years. I think it will be months.”
Keller also announced that, in June, Urban Partners and Galaxy Theaters will present the council “with a proposal to move forward with a theater project.” The idea of building a cinema in Town Square was initially discussed with lawmakers last November (read our previous coverage here).
This development, if built, would include a 10-screen multiplex cinema, with an additional stage for community theater and dance, on the Town Square parcel at SW 150th St. and 4th Ave. SW where the old city hall building is located.
“Working in this economy has been very, very challenging,” Keller said. “And then when we lose the construction lender – that was frustrating.” Nevertheless, “Urban is absolutely committed to this project.”
Corus Bank of Chicago, through which Urban Partners obtained the construction loan to build the phase one complex in Town Square, was closed and its assets seized by the Federal Deposit Insurance Corporation on Sept. 11.
Now the Urban Partners’ construction loan is held by a joint venture of the FDIC and Starwood Capital Group â€“ S.T. Residential.
“The FDIC entity does not lend itself to any quick resolution,” Keller noted. “I have spent countless, countless hours in meetings in New York, in Chicago, in San Francisco, in Seattle trying to move that process forward.”
“We have people waiting to close escrow and move into the building, but they’re stymied.” While Urban Partners waits on the FDIC process, the investment group continues to actively manage the condo/retail building.
“We have made four separate proposals to the FDIC to maintain our involvement with phase one,” Keller continued. But “since the federal takeover of Corus, we are not in control of the timing or the outcome of events.”
He said as recently as Monday afternoon, he was involved in an exchange of ideas that could help bring the parties to an agreement in the next 30 to 45 days “on our continuing involvement in phase one.”
But, Keller cautioned, although he remains hopeful, there is no certainty at this time that a resolution will emerge from the current discussions. Even so, “I don’t anticipate that an impasse will develop.”
A factor that could help Urban Partners is that their construction loan is the only one of the 135 large commercial assets – ranging in value from more than $50 million to around $225 million – in the portfolio held by S.T. Residential for a property located in Washington state.
The $52 million, phase one condo/retail complex in Town Square, with 142 residential units and 20,000 square feet of ground floor commercial space, “was completed on time and on budget,” Keller stated.
But phase two – construction of more condos in a separate complex just north of the existing building, which opened last June – “is on hold given the collapse of the housing market.”
Development of a cinema in the meantime would “increase business downtown and benefit existing businesses,” he predicted.
“Urban Partners is so proud to be part of Town Square,” Keller told the council. “This development and our investments remain a very high priority â€¦ despite the severe economy.”
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