Riverwalk developer secures $380M, resumes construction on Mission Valley project

More than three years after breaking ground, the developer behind the Riverwalk project is finally in a financial position to erect its first residential and retail buildings on the expansive Mission Valley property that follows Friars Road west of Fashion Valley.

Monday, Houston-based real estate investment manager Hines resumed construction on the first phase of the mega project, following a lengthy hiatus, after securing two loans totaling $380 million. The loans will finance the construction of 721 market-rate apartments and townhomes in four buildings, alongside a central plaza and 75,000 square feet of retail space.

Completion of the first phase of work is now anticipated for the spring of 2029, the developer said in a press release.

“Riverwalk is a transformative project and a lasting investment in San Diego’s future — bringing together much-needed housing, enhanced transit access, and vibrant public spaces within a thoughtfully designed, pedestrian-friendly neighborhood,” Hines Managing Director Eric Hepfer said in a statement.

The 195-acre, mixed-use Riverwalk project hails from Hines and longtime land owner the Levi-Cushman family, who teamed up on the current plan in 2017. The project will eventually replace the entirety of the Riverwalk Golf Club at 1150 Fashion Valley Road.

At build-out, Riverwalk will include 4,300 residential units, 152,000 square feet of retail stores, 1 million square feet of office space and a new trolley stop. The development plan also calls for 97 acres of parks, open space, and trails with bikeways and pedestrian walkways that follow the San Diego River Pathway.

In September 2022, Hines started construction on the initial phase of work — on the golf course’s shuttered northern, nine-hole course — with the developer expecting to complete the first block of residential units by early 2025. Instead, the firm finished $90 million worth of infrastructure upgrades, both on and off site, before halting construction activity in 2024.

Hines said at the time that it had opted to sit out of a volatile real estate financing market punctuated by high borrowing costs.

Roughly a year-and-a-half later, the developer is back on track. The firm said it received earlier this month a $278-million senior loan from Bank OZK and a $102-million mezzanine loan from Related Fund Management. The developer declined to provide loan terms. Real estate investment firm Affinius Capital (formerly USAA Real Estate) is the equity partner on the project. It contributed to the costs associated with the earlier ground work.

The new debt, while substantial, represents only a fraction of what Hines will need to complete what it has described as a $4-billion project.

During its construction pause, Hines pressed forward with Riverwalk’s first subsidized housing project, called The Becker, which is being built in partnership with Wakeland Housing and Development Corporation and involves different funding sources. The $140-million Becker project includes 190 residential units that will be deed restricted for low-income households. Wakefield started construction in July.

Hines is required, as a condition of its 2020 development agreement with the city of San Diego, to set aside a total of 430 units for people making 65% or less of the area median income.