JEFFERSON CITY — The developer of a 25-story office tower in downtown St. Louis has been given a reprieve of at least 120 days to pay off a state-financed loan.
In action Tuesday, the Missouri Development Finance Board signed off on a four-month extension to a $5 million loan it gave to the city in 2009 that helped transform the building above the old St. Louis Centre mall into what is now known as 600 Washington.
Robert Miserez, executive director of the board, said the extension will give officials with the state agency and the city’s Land Clearance for Redevelopment Authority time to work out a possible refinancing package.
The loan, which was set to be paid off on Dec. 1, went to the LCRA to help fill a gap in financing for the redevelopment of the 375,000-square-foot tower. The LCRA then loaned the money to the developer, Stacy Hastie, at a current rate of 4.66%.
Hastie’s firm has been paying only interest on the loan and still owes the principal amount, $5 million.
When Pyramid Cos. collapsed in 2008, leaving behind a portfolio of unfinished downtown redevelopment projects, Hastie and a group of investors were the sole bidders for the 600 Washington property.
It sold for $12.7 million at auction and Hastie cobbled together a series of state and city tax credits and loans to help finance the redevelopment. Its redevelopment attracted a number of high-profile tenants, including major law firm Lewis Rice. It’s about 75% leased, according to city development officials.
Hastie said Tuesday it’s not that he and his partners can’t pay off the loan. They put the building up for sale but offers came in below what he and his partners put into the building. Now, he said he and his partners need “a little more time to build a little more value” by adding tenants before a sale.
That said, if an attractive offer isn’t made, he and his partners plan to pay the loan off and are open to being long-term owners. Hastie said the city had backed millions in Pyramid debt and faced a big hit if the building went dark, not to mention the impact that would have had to a key entrance to downtown.
“I really don’t think asking for two or three more years of an extension while we try to recover a portion or a large portion of our initial investment is too much to ask,” Hastie said. “We have not drawn one nickel out of this property and will not. All we’ve done is hold it and poured money into it.”
Miserez said the state has a “significant interest” in keeping the building afloat because the office building leases 450 spaces in the adjacent, state-owned parking garage on Seventh Street.
Some board members said the refinancing package should include a fee or penalty. Member Matt Dameron urged Miserez to keep the board informed about the restructuring.
“This should be an ongoing discussion topic,” Dameron said.
LCRA Executive Director Otis Williams said his agency also is working with Hastie to find a solution.
“We are trying to facilitate negotiations with the developer,” he told the board.
At its own board meeting Tuesday, the LCRA also approved extending the loan. LCRA staff told the board the loan will likely need to be extended again when the 120-day extension expires in March so the developer has enough time to refinance.
Charlie Hahn, financial controller at the city’s economic development office, told the LCRA board that a new financing arrangement won’t have as long a term as the loan now being extended. He also said future payment terms will likely include requirements to make principal payments in addition to interest.
Jacob Barker of the Post-Dispatch contributed to this report.