Collapsing credit and debt markets haven't dimmed the hopes of Ketchum developer Jack Bariteau. He believes he will be able to raise the necessary funds to build the recently-approved Hotel Ketchum.
"We've got a hard road in front of us for the next three to nine months," Bariteau said. "But this is a kind of catharsis—it's needed to weed the excess out of the system."
Bariteau says his 73-room hotel, which garnered a green light from the Ketchum City Council last month, would be anything but excess. He says his plan to build a four-story luxury hotel on the southeast corner of Main and River streets would fill a hole in the accommodation offerings of the Wood River Valley.
"We have found people receptive to the demand for this kind of product," said Bariteau, whose development history in Ketchum includes the Colonnade and Christiania buildings. "But some interested investors are asking, 'Do we have to do it now?'"
Because of the anticipated difficulties in raising the estimated $65 million to build the hotel, the council granted Bariteau two years to begin construction, instead of the one year normally permitted by city ordinance.
"In healthy times, you could get a loan for around 75 percent of the project," Bariteau said. "Now, it's looking more like 40 to 50 percent."
That means Bariteau will probably need $25 to $30 million in private equity to get the hotel underway, 20 percent of which he and his partner Paolo Patrone, owner of Piazza Hotels, already have.
"This overall equity figure could drop to $20 million if the markets open up," Bariteau said. "Right now, it simply makes you work harder and become more creative."
However, Bariteau said approval of his project, combined with his past development experience, will at least allow him to get his foot in the door of investors.
"This is kind of a one-two punch for me when it come to attracting investors and talking to lenders," Bariteau said. "And if the Warm Springs Ranch Resort is approved, the financing opportunities will increase because of the additional marketing it will bring to the area."
Bariteau is confident that the market will swing around in time to meet his two-year deadline.
"This is probably the fourth credit crunch I've been through in my career," Bariteau said. "They seem to come around every 12 to 20 years in order for the market to clear itself."
But even if money flows anew, his work will be far from over.
"It will take 10 to 12 years to recoup my own investment," Bariteau said. "Our lenders and other investors have first priority once we go into operation. I get chagrined when people say I just want to make a quick buck off the city."
