DATE: November 17, 2015
SUBJECT:
Title
ORDINANCE GRANTING FINAL FORM LEASE BETWEEN THE DISTRICT AND LPP LANE FIELD, LLC FOR THE LANE FIELD SOUTH HOTEL PROJECT LOCATED IN THE CITY OF SAN DIEGO, FOR A 66-YEAR TERM, WITH CONDITIONS
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EXECUTIVE SUMMARY:
LPP Lane Field, LLC (Developer) has an option to lease agreement (Option) with the District for development of a 400-room hotel on the Lane Field South site (see Attachment A: Site Map). Since the Option to Lease (Option) agreement was approved at the December 2014 Board meeting, LPP Lane Field, LLC (Developer) has been working diligently to progress the design of the hotel tower, secure their equity and debt financing and a hotel brand, and prepare the Option to be exercised and start construction by the end of 2015.
The Developer is currently in final negotiations with InterContinental Hotels Group (IHG) to manage and brand the hotel as an InterContinental hotel, which is their signature brand. With InterContinental as the brand for all 400 rooms, the overall economics of the project for the District have improved from what was originally anticipated when the Option was approved in December 2014 resulting in increases in the projected rent the District is estimated to receive immediately upon completion of the project (see Hotel Brand discussion below for more detail).
The Developer has also executed an equity term sheet with China Orient Asset Management (COAM) which is a state-owned asset management company with assets in excess of $36 billion, to provide approximately 88% of the required equity with the Developer and IHG providing the balance. In addition, a debt term sheet has been executed with PNC Bank (PNC) to secure approximately $114.4 million in financing for the project.
While the overall cost of the project has increased by approximately $11 million, the Developer, and its partners, have absorbed most of these increases. To help further offset these increased costs and l...
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