Broadwest development secures
massive construction loan
Nashville Business Journal
By Adam Sichko - Senior Reporter
Mar 25, 2020
An Arkansas bank that has financed the construction of at least three Nashville towers has added two more to that list: the high-rises that will define Midtown's Broadwest mixed-use development.
Bank OZK (Nasdaq: OZK) has loaned $278.9 million to the project, according to newly filed public records dated March 23. Alabama-based Propst Development LLC is spearheading the project, which features a 21-story office tower, 42,000 square feet of retail and a 34-story tower containing a high-end Hilton Conrad hotel and 196 luxury condos. The condo/hotel tower is being developed in partnership with Franklin-based Chartwell Hospitality.
To this point, the Propst family had been funding construction with its own money, and boldly beginning that work without any tenants in hand. Two years ago, the Propsts bought the excavated 3.9-acre city block at 1600 West End Ave. from Nashville developer Alex Palmer, who pursued his West End Summit project there for about a dozen years and ultimately was unable to secure all the money he needed to build it.
Construction loans always are significant milestones in a project's timeline — officially turning a developer's vision into a fully financed reality. Here are the key takeaways from the Propst team reaching this checkpoint, and a look at what's to come:
The loan equals about 52% of Broadwest's estimated $540 million price tag.
This is now the ninth active construction loan in Nashville valued at $100 million or more. Two years ago, there was one loan over that benchmark (for the Grand Hyatt at downtown's Nashville Yards development). This is the second-largest loan in that elite group, just $1.14 million shy of the loan that's fueling the Four Seasons skyscraper under construction in SoBro.
The heft of the loan is all the more notable against the backdrop in which the Propsts and Bank OZK finalized it: the coronavirus pandemic. Some signatures on the March 23 public record date to Feb. 20, at which point the U.S. had more than a dozen confirmed cases and CNBC carried this headline about bracing for a pandemic.
Broadwest's 510,000-square-foot office tower will be Nashville's largest multi-tenant office building since Pinnacle at Symphony Place opened in 2009. At least 21% of the tower is leased thus far, including law firm Baker Donelson, financial planner Robert W. Baird & Co. and ServisFirst Bank.
Bank OZK, formerly Bank of the Ozarks, financed construction of Tony Giarratana's 505 residential skyscraper, the downtown Westin, and the tower at 1200 Broadway that just opened with a Whole Foods Market on the ground floor. As of a mid-2017 NBJ analysis, Bank OZK had funneled more money into Nashville construction than any other lender — though it had been relatively quiet since confirming plans in mid-2018 to open local branches in Nashville.
Construction continues, as Mayor John Cooper exempted that industry from his March 23 order that required some businesses to close their offices in an effort to slow the spread of coronavirus. Construction has reached the 16th floor of the office tower, and the fourth floor of the hotel/condo tower. About 1.5 acres of open space separates the two high-rises, also framed by a three-story building that will contain retail space and another 100,000 square feet of office space.
The project remains on course to open in 2021, built by Turner Construction Co. and Hoar Construction LLC.