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<br />GTNY CHENEl TNE BUSIMESS JOURNAI
<br />Construction on The Round project in BeaveRon has been slower due to financing challenges.
<br />Permanent f in '
<br />ancing
<br />eludes `Th '
<br />e Round
<br />BY ROBERT GOLDFIELO
<br />,.._.. Business Joumal staff writer
<br />ehind schedule and over budget,
<br />work continues on the $30 million,
<br />first phase of The Round at
<br />Beaverton,the high-density project
<br />centered around the Beaverton Central
<br />light•rail station.
<br />While rumors of a work stoppage at The
<br />Round have floated along the real estate
<br />grapevine for a month, developer BCB
<br />Group and the city of Beaverton maintain
<br />that work is proceeding. But BCB, which
<br />started the eight-acre project a year ago
<br />without a construction loan, has yet to
<br />secure permanent financing. The compa-
<br />ny's reliance on its own equity has slowed
<br />construction, and unexpected costs have
<br />made financing harder to come by.
<br />"We're having difficulty getting a perma-
<br />nent loan," said principal Sylvia Cleaver,
<br />the "C' in BCB. "We probably are not push-
<br />ing (the construction pace) like we would
<br />have (with financing in place), but I don't
<br />think iYs all that much different."
<br />The Round's first phase consists of a cir-
<br />cular central plaza split by the MAX tracks;
<br />601iving units and ground-floor retail in the
<br />Crescent and Promenade buildings north of
<br />the tracks; and a fiv~story office building
<br />~~ith of the tracks. Later phases will add
<br />~~ther 100 living units, another office
<br />cower and a 15aroom hotel. The develop-
<br />ment is north of Canyon Road near Hall
<br />Boulevard.
<br />Delays and cost overruns began with wet-
<br />lands conservation issues, and continued
<br />when it was discovered that stabilizing the
<br />land enough for building would cost $6.7
<br />million, greatiy exceeciing estunates. Put
<br />those factors together with the more recent
<br />disarray in capital markets and commer-
<br />cial real estate lending and it makes perma-
<br />nent financing elusive.
<br />An earlier financing arrangement put
<br />together prior to the start of construction
<br />~ apart during the summer, Cleaver said.
<br />=r.,.ice then, BCB has scrambled to find a
<br />permanent lender. She said the company
<br />now has a second deal in place, one that she
<br />hopes will close by early December.
<br />International events and shifts in invest-
<br />ment patterns have virtually shut down one
<br />form of commercial lending, the so-called
<br />mortgage conduits operated by Wall Street
<br />investmert houses. The changes have
<br />soured real estate deaLs around the country,
<br />sending borrowers off to secure funding
<br />from new lenders, usually at higher interest
<br />rates than thev nrevtoutiv PXDP(`tP(j
<br />Cleaver said BCB's new lender for The
<br />Round is a traditional lender-read that as
<br />a bank, pension fund or life insurance com-
<br />pany--as was the original lender.
<br />If she could start all over again, Cleaver
<br />said she'd obtain a construction loan, which
<br />finances a development project and is later
<br />replaced by long-term financing, often pro-
<br />vided by a different lender.
<br />But the permanent deal was seemingly
<br />lined up, Cleaver said. Also, BCB felt pres-
<br />sure to start construction quickly, and it
<br />had to create equity in the project by spend-
<br />ing some of its own money before it could
<br />obtain either construction or permanent
<br />financing. So it launched the work.
<br />Currently, the south office building is 30
<br />percent finished, and Cleaver anticipates
<br />completion in May or June. She said the
<br />Crescent will be completed in February or
<br />March. The general contractor for the pro-
<br />ject is Bingham Construction, operated by
<br />Cleaver's two partners in BCB, Selwyn A.
<br />Bingham and Selwyn R. Bingharn.
<br />The interruption brought about by the
<br />land stabilization issue led to a two-month
<br />delay in steel erection for the office build-
<br />ing. That, in turn, delayed installation of
<br />the utilities and mechanical package for
<br />The Round, which will be controlled from
<br />the office building. University Mechanical,
<br />the utilities contractor, laid off about 40
<br />workers last month because of delays.
<br />The utiIities work is a high-profile ele-
<br />ment of The Round. Developed by
<br />MicroClimates, a subsidiary of Enron, the
<br />system will bundle heating and air condi-
<br />tioning systems with water, natural gas,
<br />electricity and telecommunication services
<br />tnat invoive sectuity, telephone service and
<br />internet access. 'Ilenants will receive one
<br />bill for all those services.
<br />While the contractors scurry to complete
<br />the work, the principals at BCB have their
<br />mind on some additional problems, such as
<br />negotiatirig a settlement with the city of
<br />Beaverton for the expense of stabilizing
<br />what was city-owned land.
<br />The city, which selected BCB for the pro-
<br />ject after issuing a request for proposals,
<br />has already given BCB title to the eight
<br />acres as partial compensation fqr the
<br />expense. But Cleaver expects the city to
<br />come up with more. The land was worth
<br />about $2.7 million, and BCB is still $4 mil-
<br />lion in the hole, she said.
<br />IYs too early to call the situation a dis-
<br />pute, Cleaver said. She expects the city's
<br />staff will come up with a proposed settle-
<br />mont cnnn I'l
<br />In Portland
<br />Pete Behr
<br />Rlck Brooke
<br />Mike Glanville
<br />Mark Hjorc
<br />Jeff Lyon
<br />Laura Nigro
<br />)ack Zuber
<br />29431 1 1
<br />29431 13
<br />2943108
<br />29431 18
<br />29431 10
<br />29431 12
<br />2943138
<br />~'ti
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<br />POR7UND503l126.26lI SUTTI
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<br />t s a rare opportunity. The cha
<br />just a lease, but to put your o~
<br />an entire building. A building th
<br />in size, and pres~nce, for the fir
<br />thaYs decided to make its mark
<br />ahead. More than 80,000 sq. ft.
<br />possibilities including a private
<br />courtyard entry and the potenti<
<br />for on-street retail. Enviable
<br />underground parking, and a
<br />prominent corner location on
<br />the transit mall for easy
<br />access. Truly a find, this is
<br />a building willing to wear
<br />your good name...all it takes
<br />is being the first major tenant
<br />to find it.
<br />S~
<br />
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