Friday, November 13, 2009

Investment will Supplement the $88 Million Development of the Embassy Suites Riverwalk

CHICAGO – Aries Capital is pleased to announce that the Urban Development Fund, LLC (UDF), an affiliate of Aries Capital, has provided $21.5 million in financing to facilitate the development and construction of the Embassy Suites Riverwalk in San Antonio, Texas. The investment was made possible by an allocation of New Market Tax Credits (NMTC).

The new Embassy Suites Riverwalk on Houston Street will be a 285-room, 16-floor hotel featuring two levels of below ground parking, a 7,000 square foot grand atrium, and a 7,500 square foot ballroom. The property on which the hotel will be built has been home to numerous structures throughout the years, including a livery stable, carriage house and boarding house in the 1880s, a bowling alley and laundry in 1904, and a bank building in the 1960s. In the late 1980s, however, the bank building was demolished and the property has remained a parking lot.

The new Embassy Suites will be the anchor for the redevelopment of the Houston Street area, which once hosted a thriving retail district, but has since deteriorated into empty store fronts and parking lots. The property is located in a census tract that exhibits severe economic distress, with a poverty rate of 37.5% and an unemployment rate of 17%. The construction of a full-service hotel on this site is expected to create 255 full time jobs and 425 temporary construction jobs for community residents.

“Without the subsidy provided by UDF and the NMTC program, the Embassy Suites would not have received financing from traditional lenders,” said Neil Freeman, Chairman and CEO of Aries Capital and President of UDF. “With the credit crunch the country is facing, financing for the hospitality industry has all but disappeared. The Embassy Suites Riverwalk is one of a very few hotel projects financed nationwide in the last year.”

UDF provided a $17 million senior loan, a $2.25 million junior loan, and a $2.25 million equity investment to the project. The financing includes numerous rates and terms, more advantageous than otherwise would be available, including a below market interest rate. The hotel has the potential to affect the redevelopment of the Riverwalk along Houston Street. In addition, it will also increase the property taxes collected from the property as well as increase the sales and hospitality taxes collected by local and state governments.

“The extremely low interest rates, as well as the equity provided by UDF, will allow the project to begin construction immediately,” said Michael Qualizza, CFO of UDF. “It will also enable the project to weather any slow business periods without being saddled with high debt service requirements.”

Urban Development Fund, LLC (UDF) provided the loan for the construction of the project by using NMTC financing. UDF was formed by Aries Capital to provide capital to developers of real estate projects that have a catalytic impact on community revitalization in underserved markets. UDF’s focus is on developing retail development, office space, industrial facilities, and community facilities in particularly economically distressed areas. UDF utilizes the subsidy afforded by the New Market Tax Credit program to offer more favorable rates and terms that would not have been available to projects in the marketplace, and is committed to investing all of its NMTC equity in communities designated as areas of higher distress.

Established by Congress in 2000 as part of the Community Renewal Tax Relief Act, the NMTC program was created to stimulate economic opportunity and job creation in low-income communities. The program permits individual and corporate taxpayers to receive a credit against Federal Income taxes for making qualified investments in investment vehicles known as Community Development Entities. To date, UDF has received allocations of New Markets Tax Credits totaling $257.5 million. UDF recently received a $65 million allocation as part of the additional $1.5 billion in NMTCs awarded as part of the American Recovery and Reinvestment Act.