ARRIVE Albuquerque Update
[As of August 31, 2020]
We are continuing our active discussions with prospective lenders on the final construction loan for this project. Due to the ongoing COVID-19 pandemic, financial institutions continue to drag their feet in resuming lending operations, especially on hospitality projects, as they await to see how/when the pandemic will fade. We are seeing some signs in the industry that the lending market may be opening back up as the public markets have fully recovered, and we will continue to push as hard as we can to finalize the bank lending before year-end.
We will therefore keep the Arrive ABQ Community Fund open through the end of 2020 until the construction loan is ready for closing. Whenever we secure the final loan terms, we will provide advance notice to close the Fund as soon as practicable thereafter, so that we can commence construction. All investments already made are continuing to accrue preferred return as of the date of its acceptance, so the extension of the fundraising period and the ongoing delay in the lending process will not impact such.
As a project update, the development team has already secured full building permits and has obtained final pricing from the general contractor, so the project is ready to begin ASAP upon securing the final construction loan. If construction begins by the end of the year or early 2021, the opening will likely occur in Summer 2022.
We remain highly confident about this project, which was always meant to be a long-term investment with 10+ year holding period and had been underwritten accordingly. As we already own the property, our holding costs are very modest during this time. The various additional tax benefits from Industrial Revenue Bonds, and federal Historic Tax Credits all remain in place, and eligible investors can continue to take advantage of the Qualified Opportunity Zone tax benefits.
We also continue to strongly believe in the fundamentals of the Albuquerque economy and anticipate an overall rebound for the hospitality industry whenever the pandemic passes. New Mexico was quick to act on preventative measures such as requiring masks, providing free testing equipment, and implementing work-from-home for non-essential businesses. State and local government continues to take a strong stance on containing the virus and this has resulted in some of the lowest recorded cases in the country -- this is especially impressive considering the hotspots that have occurred in neighboring states like Arizona.
Thank you for your patience during these unforeseen circumstances. We are all working through this period, and will continue to keep you posted on the progress. Please also feel free to post on the community comment board if you have any questions about anything. Thank you.
- ARRIVE Albuquerque Management