Eamon O’Marah

Title: Managing Partner
Experience: 41 Years
Age: 41

Eastat Realty Capital is currently preparing to open a boutique hotel, chasing a Rose Kennedy Greenway development parcel, and pushing plans for a 250,000-square-foot office building through Boston’s permitting process. For Eamon O’Marah, Eastat’s managing partner, the key to building successfully these days isn’t just location or timing. It’s scale.

How has Eastat been positioning itself in this new environment?

We feel we’re in a good position because we have a lean, bright organization that has low overhead. We’ve been very careful about the first step: buying into a project. And from there, we try to pursue projects that are responsibly scaled so we can successfully get through the process and get capitalized and develop the properties. It became pretty clear to us 18 months ago, almost two years ago, that things were shifting quickly to a very different lending environment, and that we had to have much more modestly-scaled developments.

Is Parcel 9 on the Greenway an ideal-type project for you now?

Parcel 9 is a perfect fit. We hear so many opportunities, whether existing assets or development sites. You look at them and you think about how they’re going to fit into that box of demand from the market and ability to get financed. Realistically, for the next couple years, the only ground-up work you can get financed is multi-family. Here’s a $40 [million] to $45 million project, 80 units, 70 parking spaces with this great ground-floor market tucked right into the North End and Faneuil Hall. It’s just about as close as you can get to the only thing that can be financed and built today in Boston. Our proposal is designed to exactly what the zoning and the RFP asked for, and it produced a financeable project. How beautiful is that? And the other thing is – we have financing now. Right now. Which is very unusual. We’re ready to go. What we’re proposing, we can deliver. We just have to get designated.

Are you seeing an increased appetite for that kind of surety on the part of the entitling agencies? And do you think that attention to the finance end has the potential to tip this parcel in your favor?

Definitely. That’s what we worked for. We’re for real. We’re proposing a viable project, and we went to the extent of arranging financing. We don’t want to waste our time, either. It is heightened now because it’s so hard to get financing. You can finance an office building, but it would be under terms that no one would do. In other words, if you want to do it with 40 percent equity and 100 percent recourse in the loan, knock yourself out.

Is it a lack of finance, or a lack of demand?

They’re totally intertwined. They’re one in the same. The lenders want to know, ‘What’s the logic to build it? Is there a demand?’ We’re not just building it for fun. If the demand’s not there, you’re not going to get it financed. If the demand’s kind of there, you’ll get it financed, but it’ll be under really stringent terms that make it so onerous it’s not worth it for the developer.

And that’s where we are right now.

We’re right about there. I think the larger projects getting permitted obviously think things will change. But it still stands true that smaller, more modestly-scaled developments are easier to absorb.

How many commercial office buildings go vertical in Boston this year?

I don’t think anything’s going vertical. Most real estate investors right now are pursuing the distressed asset opportunities. Why spend $400 a square foot building a new building when you can buy an existing one for $200 a square foot? It literally is that simple. The difference comes when you say, ‘I have a 30,000-square-foot parcel on the Greenway, and I have financing that is manageable.’ Of course I’m going to build that.

So what are the prospects for 45 Stuart? You’re in scoping now, you’ll get through Article 80 soon, and then what happens?

We’ll develop it when the lending market’s a little different. The idea is, this is the hinge block – it connects downtown to the Back Bay. In midtown, you have every other use but medical office or office. It will fill out that neighborhood. The project is a $135 million development. Not bad. It’s 250,000 square feet of office. Two years ago, that was small. Now it’s big. It’ll be viable at some point. We’re totally committed to it.

I’m curious about your experience with the Ames Hotel so far. The marketplace was very different when the project was conceived and redevelopment began. What has it been like watching the ground underneath you shift?

Fortunately, we got it capitalized before everything fell apart. We purchased the building in April of ’07 in a joint venture with Normandy. We were fortunate to capitalize the building by the fall of ’07. Then, once we got it all capitalized, a number of challenges started to present themselves. First of all, the economy fell apart. And our construction costs went up. You hit all sorts of unforeseen conditions. We took out six old bank vaults that took us three months just to cut them out. It’s a tiny little site, it’s constrained. And at the same time, we were determined to do a beautiful job. We realize the importance of the building. It’s a National Historic Register site. We want it to be the best boutique hotel in Boston. Opening in mid-October ’09, we’re feeling pretty good about that. We think it’s going to be a better time to open than the year earlier. And we think the location is unbelievable. It’s perfect. When the Ames family built the building in 1889, they could pick any corner in the city of Boston. And that’s the corner they picked.

What’s it been like working with Normandy? All of a sudden, after the Hancock, they’re one of the big fish in town.

Normandy has been a great partner. They are really hard-working, they’re very smart, and the key piece of the puzzle. They’re very aggressive. They’re not afraid to make decisions. We had to make really fast decisions on the Ames. My partner, Rich Kilstock, put the building under agreement and we had 45 days to close. That included Normandy’s investment. And we pulled it off because we did tons of underwriting, and Normandy was able to see the vision and be aggressive enough to move. And they’ve been committed.

Eamon O’Marah’s Top Five Boston Buildings:

The Ames Building

Rowes Wharf

The John Hancock Tower

Heritage on the Garden

The Barking Crab