Port Commission grants 12-month extension to Broadway hotel developer to finalize financing

The Port Commission unanimously approved a 12-month extension to a lease-disposition and development agreement (LDDA) with TZK Broadway LLC, allowing the developer additional time to finalize financing and lease revisions for a hotel project at Broadway and the Embarcadero.

Ricky Titani, waterfront development project manager, told commissioners the project has been delayed by market disruptions since the LDDA’s original 2019 approval and the financial effects of the COVID-19 pandemic. Staff described the current proposal as a 161-room luxury hotel with a Teatro Zinzani dinner-theater space and about 14,000 square feet of public space. Project costs have increased to roughly $169 million, staff said.

“The key task you need to complete to continue to move the development forward is complete negotiation of the proposed lease terms, obtain your approval, go to the Board of Supervisors and, hopefully, secure financing and close escrow,” Titani said in presenting the proposed third amendment, which carries a $25,000 incremental extension fee and maintains a previously deferred transaction cost promissory note of roughly $411,000 due at closing.

Jay Wallace, a representative for TZK Broadway LLC, said the development team has secured parts of the capital stack but needs time to land the remaining lenders. He told the commission the company remains committed and has continued investing private equity in the project.

Commissioners asked questions about lender hesitancy, union labor requirements and the ground-lease structure. Several commissioners praised the project’s community elements and urged the developer to move forward quickly to avoid further construction-cost escalation. President Gilman and other commissioners said they would continue supporting the project and the staff recommendation.

The vote: The commission approved Resolution 25 53 by unanimous vote.