Construction loan helps launch Millbrae hotel next to BART station
A new Marriott Residence Inn is expected to sprout next to the Millbrae BART station after landing a construction loan that serves as a welcome counterpoint to the pall of economic uncertainty cast by the coronavirus.
A partnership of Republic Urban Properties and Huntington Hospitality Group has landed a construction loan totaling $42 million that allows the group to develop a hotel that would be part of the mixed-use Gateway at Millbrae Station project.
"Securing the construction funding during one of the most challenging times in Bay Area history is a major milestone on this journey to creating a landmark hospitality project" in Millbrae, said Michael Van Every, chief executive officer with Republic Urban Properties, a veteran Bay Area development firm.
The total cost of the hotel is $95 million. In addition to the construction financing, Republic Urban, Huntington Hospitality, and EB-5 Capital plunked down more than $34 million in investments for the project. EB-5 raises foreign capital from immigrant investors.
While Republic Urban is a big developer, Huntington Hospitality Group has developed 20 hotels and currently operates 17 hotels in the United States.
"Gateway at Millbrae Station will be a world-class destination for the region," said Kevin Keefer, president of Huntington Hospitality.
The mixed-use Gateway at Millbrae Station is slated to add 157,000 square feet of office space, 44,000 square feet of retail, and 400 new apartment dwellings, of which 100 will be affordable units and 80 will be veteran-preferred residences. The development is rising near the corner of Millbrae Avenue and Rollins Road.
In December 2019, Republic Urban landed a $206 million construction loan from U.S. Bank for the residential and office portions of the development. Construction of these components of the complex is already underway.
The financing from Western Alliance Bank to build the hotel successfully concludes seven months of negotiations to land the loan. The hotel is slated to begin construction in September.
With a location next to the Millbrae BART station and a Caltrain stop, as well as being a short distance from San Francisco International Airport, the hotel could cater to both business and leisure guests.
The hotel developers noted that during a time when worldwide travel has imploded amid government-ordered business shutdowns to combat the coronavirus, as well as concerns about catching the deadly bug, it's a rare event to land financing to build a large new hotel.
"Republic is blessed to be working with a partner of the quality of the Huntington Hospitality Group, that remained committed to our vision over six years, as we made our way through entitlements, the ground lease with BART and financing," Van Every said.