Hynes: Filene's project on hold
Boston Business Journal - by Michelle Hillman
John Hynes, the lead developer of the Filene’s project in Boston’s Downtown Crossing, has told Boston Mayor Thomas Menino that the project is on hold indefinitely until he can reduce costs and nail down financing.
The Boston Business Journal first reported the announcement late Thursday, which Hynes disclosed during a real estate panel discussion at Boston College.
In recent weeks, Hynes has cited challenges in arranging enough financing to carry the project, a massive mixed-use development on the former site of Filene’s department store.
“We are really (taking) a time out, is what we’re doing,” Hynes said. “We’re $170 million in the hole. We can’t walk away. ... It’s currently a $700 million project. The only way we’re going to get this project off the ground is to reduce the cost.”
A dejected looking Hynes said that the Filene's project has been difficult to "sell" to the out-of-town banks he's trying to convince to fund the development. Hynes has not been able to close a $400 million construction loan for the $700 million project. The Boston Business Journal reported last month that Hynes had lined up six banks including the Bank of Ireland and Bank of America and was about $50 million shy of closing the construction loan. The loan has not been signed.
As a result, Hynes said he has to reduce the cost of the office, hotel, residential and retail project. Hynes needs to find a way to make the project work given it is the centerpiece of Menino's plan to remake Downtown Crossing. Hynes said Menino was "understanding" during a meeting on Wednesday but said "the project has to happen."
Despite the fact that 75 percent of the retail space and 25 percent of the office space is pre-leased, Hynes is considering redesigning the project to save money. He's already sold off the hotel piece to Seattle-based Kennedy Associates Real Estate Counsel LP for $100 million or 25 percent less than what he expected. Hynes said he would "roll the dice" on the residential portion of the project.
"We're placing our bet that this project is going to work," Hynes said.
Still Hynes said he's in the midst of "revisting the pricing, revisiting design concepts" because "we need to save money" and "we've got to improve the cost." The construction is being halted for at least 30 to 90 days, but Hynes is unsure when it may resume.
The cost of the project and financing for it has ballooned out of control in the wake of a global credit crisis and economic slowdown. Hynes originally anticipated putting $200 million in equity into the project but risk-adverse banks have required developers to put more of their own money into deals. Hynes has $300 million in equity but has said he cannot build the project without the $400 million loan.
Related Industry News |
Latest News |
Most Viewed Stories |
Most Emailed Stories |
