DG Development Corporation has landed a $41.7 million construction loan for its dual-branded Hilton hotel development immediately adjacent to Las Vegas Convention Center, Commercial Observer can first report.
Hall Structured Finance provided the four-year debt, in a deal negotiated by Matt Mitchell. Cooper-Horowitz’s Jay Miller arranged the financing.
The property, located at 602 North Royal Crest Circle on the corner of Swenson Street and Sierra Vista Drive, will comprise a 150-room Hampton Inn & Suites and a 100-room Home2 Suites. The project’s future plans also include the development of Royal Crest Apartments—a 300-unit Class-A rental apartment community geared towards serving the local workforce (not covered by Hall’s financing).
DG Development, a Las Vegas-based real estate developer and investor led by Daniel Grimm, acquired the 8.5-acre development site—where a failed condominium project once sat—during the recession in 2011. Grimm made the savvy opportunistic purchase in anticipation of the convention center’s upcoming $1.5 billion renovation and expansion.
The upgrade is part of a wider Las Vegas Global Business District initiative being put forth by the Las Vegas Convention and Visitors Authority, which also includes an expansion of the city’s ‘World Trade Center’ designation and the development of transportation connectivity through a centralized hub, which will cater to an estimated seven million convention delegates over the next 10 years.
The new hotel property will sit in prime position, mere steps away from the 3.2-million-square-foot convention center and only four blocks east of the Las Vegas Strip.
Construction is expected to wrap in 2020, with hotel operations in full swing by the time the first phase of the convention center’s expansion wraps in 2021.
“Hall understood the project very well, and they understand the Las Vegas market,” Grimm said of why the lender was a good fit. “Additionally they have tremendous experience in the select service hotel business, and offered great flexibility.”
Grimm said the project is perfectly poised to take advantage of Las Vegas’ distinct lack of new hotel inventory in recent years—the last big hotel development to come online being the Cosmopolitan Hotel in December 2010. “We’re back to historically high occupancy rates, so there’s a big opportunity here. Additionally, the Hilton flag is underrepresented in the submarket of Las Vegas,” he said.
“We’re delighted to be working with Daniel and we think very highly of his vision for this project,” Mitchell, a senior vice president at Hall, said. “We liked a lot of things about this development; it’s a great concept, there are two strong flags under one roof and in addition to serving the convention center attendees, it’s less than one mile from the Strip. It was an easy “yes” for us.”
The project marks the first time the deal parties have transacted, but chances are it won’t be the last.
“It was a pleasure helping DG Development procure the financing for this project,” Miller told CO. “With the expansion of the conventional center and DG Development’s ability to execute, I think the project will be a home run.”