SALT LAKE CITY — The Arizona-based owner of The Gateway has refinanced its makeover of the one-time retail and entertainment hub to pay off debt and fund future improvements.
Holliday Fenoglio Fowler announced Thursday that it has arranged a $96.9 million refinancing of the 651,778-square-foot, mixed-use, upscale retail, office and entertainment complex in one of the fastest-growing areas of the central business district.
The commercial real estate capital intermediary worked with Vestar, The Gateway's owner, and funds managed by Oaktree Capital Management to place the floating-rate loan with a bridge lender.
Headquartered in Phoenix, Vestar bought The Gateway in February 2016 and is in the midst a $100 million plan to convert the property from a traditional shopping center to a retail and entertainment destination along with creative office space. Holliday Fenoglio Fowler brokered the sale.
"We ended up purchasing the note from the former owner and it really didn't provide capital for going forward," said Ed Reading, Vestar executive vice president of finance.
Reading said the project was well received in the lending community, and Vestar found a lender willing to provide enough money to not only knock out existing debt, but pay for improvements in the future. The funds could cover such things retrofitting space for a tenant, he said.
The Gateway reboot includes an urban tech hub and co-working spaces, new dining and entertainment tenants, community events and celebrations. Chedda Burger, Punch Bowl Social and The Store have recently signed leases for space.
The Salt Lake City Council last month approved a $7 million low-interest loan to the Arizona-based Athens Group to help finance an eight-story boutique hotel. The Union Station Hotel is anticipated to start construction and open in the next two years, Reading said.
Capital improvements to The Gateway buildings, common areas and parking garage are finished, he said.
"What's left is really the finalization of signing tenant leases and putting those tenants into occupancy," Reading said. "From a timing perspective, the last piece of the puzzle will be the hotel."