No News is Not Good News

Performa announces delays in securing financing for the BJCC’s planned entertainment district.
By Christina Crowe
November 29, 2007

Despite having repeatedly promised “exciting” announcements about “highly recognizable” tenants for the planned entertainment district at the Birmingham-Jefferson Convention Complex, John Elkington, CEO of Performa Entertainment Real Estate, instead had less exciting news for BJCC board members at their November 14 board meeting.

Elkington blamed the national credit crunch for a delay in securing funding for the 176,000-square foot complex, slated to lie between 22nd Street and 24th Streets North and Ninth Avenue North and Richard Arrington Boulevard. Instead of announcing new tenants, he told board members that he has hired Brian Kuzniar and Michael Potter of DTZ Rockwood, a real estate investment banking firm, to help seek financing for the project.

The move is “not anything unusual,” according to Jack Fields, executive director of the BJCC, who said this latest news is not ideal, but he is not concerned about it delaying the project or affecting the final product.

“It’s been a bummer, no question about that, but we don’t see that this is anything that would affect the continuation of the development,” he said.

Elkington hired DTZ to put together commercial packages for lenders so that he can “spend his time in the development and tying up the leasing aspects and final plans,” Fields said. At the September board meeting, Elkington told attendees that the complex, which has yet to be named, would open in late spring or early summer 2009. At the latest meeting, Elkington said that Memphis-based Performa had hoped to secure funding to begin construction by the end of 2007, but that goal would have to be pushed back to the first quarter of 2008.

“According to Mr. Elkington, he feels that if he gets his lending package and the approval of it by the first week of February—that’s the goal—then we are still right on schedule to open in June or July of 2009, with a 14-month construction period,” Fields said.

Initial cost estimates for the project, which as planned includes restaurants, nightclubs, and retail shops, were set at $25 million, plus the cost to develop two hotels, one at either end of the district. Elkington has since admitted that the budget has increased to $40 or $50 million. The hotels, including a Starwood hotel in the chain’s Aloft series, are estimated at $20 million each, increasing the total investment to a potential $80 million.

Performa was hired by the BJCC in April to build the district, based on its experience developing a similar entertainment area along Memphis’ Beale Street. The BJCC will get a percentage of revenue generated by the businesses located there and will lease the land to Performa, who will sublease to tenants.

The next BJCC board meeting is scheduled to take place on December 12.


http://taylormadesoul.com/forum/showthread.php?tid=10639

:( Kind of a bummer but with the economy I can see that they might have to delay things. Hopefully they will be able to obtain the financing necessary for this development. Personally they could knock off some of that cost if they would only build one hotel right now and see if the district brings in the tourist trade as they hoped. Then I am almost sure other investors that own big hotel holdings would be only too willing to build there.

Anyhoo, thanks for keeping us informed on this.