It was announced Tuesday that $45 million in construction financing has been arranged for the long-dormant El Encanto Hotel in Santa Barbara on behalf of its owner, Orient-Express Hotels Ltd.
The loan from Beverly Hills-based Sonnenblick-Eichner Co. will be used for redevelopment and expansion of the 92-room landmark hotel, which was built in the early 1920s. Orient-Express officials said they hope to reopen El Encanto in late 2012.
“We were successful in attracting LIBOR-based construction financing from an international money center bank despite a dearth of construction financing in the market for hotel development given the strength of the borrowing entity and the Santa Barbara location,” said Elliot Eichner, a principal of Sonnenblick-Eichner, in a news release. The LIBOR rate is the average interest rate that leading banks in London charge when lending to other banks.
Lately, hotel construction loans have been difficult to come by, as evidenced by the problems faced by the owners of the derelict Miramar resort, and Fess Parker’s unfinished waterfront boutique hotel on Cabrillo Boulevard and hostel near State Street.
“We had interest in this redevelopment from various real estate debt funds, but the LIBOR-based construction loan from an international money center bank made the most sense for the borrower,” said Patrick Brown, another principal at Sonnenblick-Eichner.
Orient-Express, which has been trying to finish El Encanto’s renovation for about five years, is a luxury hotel and leisure group focused on the leisure travel market. It owns and operates 49 deluxe hotels, restaurants, tourist trains, and river cruises in 24 countries.
Orient Express bought the property in 2004 for $26 million and closed its doors for proposed renovations in 2006. At the time, company officials said they would invest $10 million in renovations of the property.
The developers proposed changes to the plans, which angered nearby homeowners. Construction stopped while proposed changes went to the city. Nothing has been done at the site since 2006, but nearby residents keep complaining about it.
The infusion of $45 million into the project appears to have saved it, unless the neighbors prevail. Sounds a lot like the Miramar situation.
Sonnenblick-Eichner is a real estate investment-banking firm that specializes in arranging structured finance for acquisition, construction, and permanent loans, interim and mezzanine financing, as well as joint-venture equity transactions.
Sharkeez to Move
In the next few months, Baja Sharkeez, 416 State Street, plans to move to the space where Madison’s Sports Grill now operates, a Sharkeez corporate official said on November 15.
“We are currently in escrow at 525 State Street (Madison’s) and expect to close very soon,” said Leigh Lupinacci, Sharkeez corporate spokesperson in Hermosa Beach. “We are hoping to move Baja Sharkeez to that new location (pending escrow) and are planning on opening there in March.”
Sharkeez also owns the Sandbar Restaurant, 514 State Street, Santa Barbara.
“Another restaurant will be moving into our current spot at 416 State Street, but the exact details on that are not yet available,” Lupinacci said.
A Madison’s manager did not return a phone call by deadline on a published report that the sports grill plans to move to 5555 Hollister Avenue, Goleta, where Sizzler’s Steak House operates.