Builder puts lien on Waterfront Pearl developer
Hoffman Construction seeks $15.8 million, saying it hasn't been paid in two months
Tuesday, August 05, 2008
JEFF MANNING
The Oregonian Staff
Hoffman Construction has slapped developers of the Waterfront Pearl condominium project with a $15.8 million construction lien.
Bart Eberwein, Hoffman vice president, said Monday that the Portland construction company filed the lien in late July because it has not been paid in more than two months.
The developer of the two buildings on the west bank of the Willamette River near the Broadway Bridge said that the project is on track and that the lien is a momentary glitch.
Paul Mayer, of Vancouver, B.C.-based Pemcorp Development, said the building's rising price tag has forced developers to restructure their loan agreement with their lenders. While negotiations continue, the developers have not taken any draws from their constructions loans, which meant that Hoffman didn't get paid.
Design changes and other factors pushed the building's price tag from slightly more than $80 million to about $91 million, Mayer said.
"This is a nine-figure financing package," he said. "It's not the kind of thing you can amend with a phone call."
Condos have become a tough sell in Portland. Declining demand has forced some condo developers to convert buildings under construction to apartments.
Mayer said sales at Waterfront Pearl are going well, given the slowdown. About half the project's 194 condominiums have been sold. The condos range in price from $449,000 for a 921-square-foot one-bedroom unit to $2.8 million for a 3,300-square-foot, three-bedroom suite.
Hoffman broke ground on the building in October 2005. Sales began in earnest in mid-2006.
Early on, water was a problem at the site. Hoffman crews spent a lot of time pumping Willamette River water off the property, Eberwein said.
The "unexpected site conditions," combined with the building's complex design and changes requested by the developer drove up the price to beyond $90 million, Mayer said.
Hoffman last got paid in the spring. "There were a few late payments, then it went to zero payments," Eberwein said.
Mayer said he expects the problem to be resolved shortly, when the lenders agree to restructure the loan.
Waterfront Pearl's main lender is CPDQ Mortgage, an affiliate of a large Quebec pension fund. A subsidiary of Australia-based MacQuarie Group furnished additional financing.
U.S. banks have written off billions of bad residential development loans and are retreating from the market to limit further losses.
While Portland's real estate market remains one of the strongest in the country, it too has seen declining prices and slack demand. The condo market has been particularly weak.
Mayer said Waterfront Pearl's lenders remain committed to the project.
"Our lenders are extremely sophisticated," Mayer said. "They are international players. They have a broad perspective."
Jeff Manning: 503-294-7606;
jmanning@news.oregonian.com.