GRAND RAPIDS — Citing decisions to restructure leasing and make tenant improvements on their own, the owners of a major Grand Rapids development today asked the state for administrative approval to amend its loan agreement.
According to documents filed with the Michigan Economic Development Corp., an affiliate of Grand Rapids-based Orion Construction Inc. requested an amendment to its initial Michigan Community Revitalization Program (CRP) loan.
The development and general contracting firm said that the initially-projected $45 million cost for Arena Place had experienced “cost overruns” and that the company needed funds to finish the project and make tenant improvements.
John Wheeler, vice president of business development at Orion Construction, wrote in an email toMiBiz that the firm had opted to pay for upgrades to corporate offices in the project in exchange for higher rents.
While costing $5 million in cash, the move added $7 million in value to the building, he said.
“It was a sound business decision,” Wheeler said in his email.
Additionally, Wheeler cited upgraded materials choices and an enhanced security system for other increased costs.
According to the documents, Arena Place Development LLC — registered to Orion Construction CFO Gary Postma — will bring an additional $1.5 million in equity to the project while Mercantile Bank of Michigan will increase its loan participation by $3.5 million.
The Michigan Strategic Fund’s initial investment of $4.5 million remains unchanged. The repayment of the loan will extend from 22.7 to 25 years.
According to the documents: “Due to higher than projected rental rates and the proposed change to the amortization schedule, the cash flow coverage will be virtually unchanged from the original underwriting, meaning it is not anticipated the MSF’s ability to be repaid will be impacted.”
The mixed-use project in Grand Rapids’ Arena South neighborhood features ground-floor retail, 100 market-rate apartments, corporate office space and a parking deck.
The building has 35 leased apartments as of today, according to Wheeler, and about 30 more residents are scheduled to tour apartments that are expected to be completed next week.
Going forward, Wheeler said he expects eight to 10 signed apartment leases per month.
The project is expected to be completed by July 31, according to the documents.
Some apartment tenants and ground-floor retail users have already moved in, as has the anchor commercial tenant, law firm Miller Johnson Snell & Cummiskey PLC.