Tenant list helps Patterson Place land a loan

Staff WriterApril 23, 2009 

Patterson Place seems to be in a time machine, one that takes you back to an era of free-flowing financing for commercial real estate projects. Think three years ago.

A Boulevard Properties subsidiary last week secured a $17.4 million construction loan for the second phase of Patterson Place, which is at U.S. 15/501 and Interstate 40 in Durham.

The $35 million addition, to be finished by the end of the year, will include a 60,500-square-foot medical office building, 35,000 square feet of shops and a 130-room hotel.

They'll join about 336,000 square feet of shops that were built at Patterson Place in 2005.

Three years ago, when lax lending fueled a building boom, funding for the second phase wouldn't have been such a big deal. But lenders have since closed the spigot on most new construction loans. Those that are approved include lots of equity and pre-leasing.

The Boulevard subsidiary, BP Phase 2 LLC, managed to secure the loan from BB&T after a year of talks with the bank. The lender agreed to finance the deal if some tenants were in place -- a challenge in a year of declining demand.

"We had one key lease that was a hiccup in December," says J. Michael Waldroup, a Boulevard partner. "It took us until March to reel them in."

Duke Medicine agreed to occupy 31,000 square feet of offices. And AT&T Mobility Experience will open a 5,000-square-foot shop. The $9 million hotel, a Springhill Suites by Marriott, is to be developed by CMC Hotels of Cary, Waldroup says.

With the lack of credit available for acquisitions and developments, some companies are raising cash the old-fashioned way: by selling stuff.

That strategy could put a hot-potato property near Crabtree Valley Mall in the hands of a new developer -- unless the owner, Weingarten Realty, decides to press forward with delayed development plans there.

Weingarten has about 10 development sites around the country it bought in recent years. The Houston company purchased the sites based on interest from prospective tenants. However, many of the projects have been iced as tenants have backed away in the recession. Now some of the sites, worth about $96 million, could be candidates for sale as Weingarten tries to boost liquidity in 2009.

Robert Smith touted the value of two sites last month during a presentation for Wall Street analysts.

One was Crabtree Creek off Creedmoor Road. The company bought the land in 2007, reviving delayed plans to build apartments, offices and shops behind the 1.3 million-square-foot Crabtree Valley Mall. The company expected to begin construction a year ago. So far, nada.

"This property continues to attract a lot of interest from both users and developers," Smith told the analysts. "So I believe we will either wind up selling this or developing it in a reasonable timeframe."

jack.hagel@newsobserver.com or 919-829-8917

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