Quote:
Originally Posted by LouisVanDerWright
Construction financing for a project like this is supposed to be procured in one big chunk that is disbursed by a title company from escrow as work is completed. Sometimes for big enough projects multiple banks will team up to split the risk. Bank A might put up the majority of a $800 million loan, say $600 million and then team up with Bank B who puts up $200 million in a second position or something. Regardless, the way you are supposed to do it is to have all parties put all funds into a construction escrow at closing and then no one can touch that except for the contractors as the title company approves their draw requests for completed work.
Waterview, Spire, et al were not done how you are supposed to fund a massive development project hence why they failed so spectacularly. Hines/Magaellan/Kennedys are no Garrett Kellher and Teng. They aren't going to amateur hour this project like that.
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Not to nit pick too much, but the Construction Lenders don't disburse all the funds into escrow at closing. That would be a colossal waste of money in terms of interest carrying costs. The Developer would not want that either. The Bank (or Bank syndication) disburse (to escrow at the title company) on a draw by draw basis, while monitoring construction. The Lender very likely requires all equity (or mezzanine financing potentially) be disbursed prior to their funds though.