Hotel & Resort

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    $15,050,000 CMBS Non-Recourse Permanent Financing for the Acquisition of a 130-Key Marriott Branded Select-Service Hotel; Corona, CA

    August 7, 2019

    Transaction Description:

    George Smith Partners successfully arranged $15,050,000 in non-recourse permanent financing secured by a 130-room Marriott branded select-service hotel in Corona, CA. The hotel is located at the gateway of the Inland Empire, close to the freeways. The loan is sized to 72% LTV fixed for 10 years at 4.79% with 30 year amortization.

    The Sponsor acquired this hotel as an expansion of their current hospitality portfolios. They were looking for high leverage financing to minimize the cash down payment required at closing.

    GSP sourced a lender willing to provide higher LTV than most other hotel lenders on a non-recourse basis which minimized the Sponsor’s cash equity contribution at closing. The Lender understood the potential of the Inland Empire lodging market and was able to navigate through the complexities of the transaction and loan process. GSP facilitated and expedited the closing in order to meet the deadline of the purchase contract. Additionally, GSP pre-negotiated with the Lender to waive their $7,500 application fee and capped their legal fees at $35,000.

    Rate: 10 year Swap + 2.78%
    Term: 10 year fixed rate loan
    Amortization: 30 years
    LTV: 72%
    Debt Yield: 10.9%
    Debt Coverage Ratio: 1.70x
    Prepayment: Defeasance
    Guaranty: Non-Recourse
    Lender Fee: Par

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    $460,000,000 Non-Recourse Senior Construction Financing for the Ground Up Development of Block 216, a 35-Story Mixed-Use High-Rise Anchored by a 251-Key Ritz Carlton Hotel; Portland, OR

    July 24, 2019

    Transaction Description:

    George Smith Partners structured and placed a $460,000,000 non-recourse senior construction loan for the ground up development of Block 216, a landmark 1.1 million square-foot ground-up high-rise development in the heart of Portland, Oregon’s central business district. The 35-story luxury high-rise will be anchored by a 251-key five-star Ritz-Carlton hotel, the first five-star hotel in Portland. The development also features Ritz-Carlton branded residences, 140,000 square feet of Class A office space, and 7,800 square feet of ground floor retail, which will open up to a pedestrian “festival street.” Located at the intersection of the Central Business and Pearl Districts, Block 216 spans a full city block. This is extremely rare in Portland. Upon completion in 2023 Block 216, will be the fourth tallest high rise in Portland and the largest tower in Portland based on square footage.

    Challenges:

    Block 216 represents the first luxury, five star hotel and branded residential project in Oregon. It is also the first project with amenities common to luxury properties but absent in Portland thus far. This ground up development is also a true mixed used project with four different uses (hotel, residential, office and retail) in a single building.

    Solutions:

    GSP focused on Portland’s incredibly strong underlying fundamentals, including: its population of 2.5 million; its unemployment rate 50 basis points lower than the national average; its 1,200 tech companies (hence the name “Silicon Forest”); the impressive number of blue chip companies with presences in the market; and, the considerable number of institutional investors active in the market. GSP also stressed the Project’s unparalleled location and walkability to every major amenity in Downtown Portland as well as the 30 new conferences booked at the Portland Convention Center as a significant demand driver for five star accommodations.

    GSP executed significant and high profile marketing to ensure the Project was appropriately received in the capital markets. These efforts resulted in a highly structured, non-recourse execution in less than six months from engagement.

     

    All terms confidential

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    $23,600,000 Non-Recourse Construction Loan for a 118-Key Hotel Project in Downtown Davis, CA

    June 12, 2019

    Transaction Description:

    George Smith Partners arranged $23,600,000 in non-recourse construction financing for the ground-up development of a 118-key select-service, extended-stay hotel in downtown Davis, California. Sized to 82.5% of total project cost, the interest only loan will float at a spread of 825 basis points over one-month LIBOR for three years and carries two 12-month extension options. With immediate access to the highway, the Project is five minutes from UC Davis and 20 minutes from downtown Sacramento. This financing allowed the Sponsor to begin construction on their third hotel project near the University.

    GSP sourced a lender who shared the Sponsor’s vision and negotiated a unique and capitally efficient funding structure on the behalf of the Client. GSP demonstrated the submarket’s resilient occupancy rates and the Project’s appealing design relative to the submarket’s dated competitive set.

    Rate: L + 825
    Term: 3 + 1 + 1
    LTC: 82.5%
    Amortization: Interest Only

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    $25,000,000 Bridge Financing for a Recently Completed 150-Room Hotel Located in the Southwest

    April 24, 2019

    George Smith Partners successfully placed $25,000,000 financing on a 150-room recently completed hotel in the Southwest. Despite ongoing construction arbitration on the Property, GSP sourced a lender who understood the seasonality of the market and the MSA. The Property is the first new-build luxury hotel in this community in over 30 years. Proceeds from the loan were used to pay off the construction financing and provide working capital.

    Rate: One-Month LIBOR + 5.00%
    Term: Two years + One, 1-Year Extension
    LTC: 59%
    LTV: 66%
    Guaranty: Non-Recourse

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    Non-Recourse Permanent Financing for Downtown Detroit Boutique Hotel

    April 10, 2019

    Transaction Description:
    During the downturn our Sponsor identified a rundown non-operating hotel in downtown Detroit. Investing over $10 million in upgrades/renovations our Sponsor was able to create one of Detroit’s finest trendy boutique hotels and restaurants. From an extremely distressed site the Developer was able to open this 144 room boutique hotel that pays tribute to, “Made in Detroit”. The turnaround of the Property, led to a turnaround of the entire neighborhood.

    Challenges:
    Hotels are one of the most difficult property types to finance. Hotels outside major cities are even more challenging and Detroit hotels are the most difficult.

    The result was that most capital providers refused to consider looking at the site. In addition, the Sponsor had the grand opening only about 18 months ago which caused many groups to be concerned about the ability to succeed long-term. Finally, non-recourse hotel financing is problematic because hotels are part real estate and part operating businesses.

    Solution:
    George Smith Partners successfully placed a non-recourse, senior loan which was securitized and sold to investors. GSP determined that by placing the loan within a Mortgage-Backed Securities pool, the overall strong yield would benefit the pool and the location risk would be minimized. With this structure, our Sponsor was able to buy out his partners and repay a personal loan he made to the Property. Because of our expertise in this type of financing, we were able to identify an international bank, which could speed up the process and work with the Sponsor’s attorney to navigate the complex issues of a securitized loan. With interest rates moving down at the end of the process we were also able to reduce the 6.05% floor rate by 35 bps and expand the amortization to 30 years. Within 35 days of going into application we were able to allow our Sponsor to buy out his partners, obtain a non-recourse loan that repaid an internal construction loan and close at better rate and amortization than originally quoted.

    Proceeds: Confidential
    Rate: 5.7% Fixed for 10 Years
    Term: 10 Years
    LTC: 75%
    LTV: 50%
    Lender Origination Fee: None
    Recourse: Non-Recourse

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    $29,000,000 for the Acquisition of the Aetna Springs Resort in Napa County

    February 27, 2019

    Transaction Description:
    George Smith Partners secured $29,000,000 for the acquisition of the Aetna Springs Resort, a rare historic site in Napa County, CA. The Aetna Springs Resort dates back to the 1870’s and is the last available parcel entitled for resort development in the Napa Valley area. Upon completion, the Property will be expanded to include 88 luxury suites, 16 adjacent estate lots averaging 50-acres each, and a permitted winery.

    Challenges:
    While investors were intrigued by the location of the Resort, the 3,100 acres of land included 2,390 acres of land that was not adjacent to the Resort. Many investors shied away from the deal given the complexity of the collateral. Other investors were more conservative towards land loans given our point in the cycle.

    Solutions:
    George Smith Partners located an investor who understood Napa hospitality and understood the value in a new resort. They also took the time to understand the land/vineyard component of the collateral and were able to provide a structure that gave the Sponsor time to sell the non-adjacent collateral in an effort to maintain focus on the resort component.

    All Terms Confidential

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    $212,250,000 Non-Recourse Senior Construction Financing for the Ground-Up Development of a Montage and Pendry Resort & Residences, La Quinta, CA

    January 15, 2019

    Transaction Description:

    George Smith Partners successfully placed $212,250,000 of non-recourse, senior construction financing for the development of a 240-key, dual-branded, 5-star Montage and Pendry resort in La Quinta California. The 525-acre project encompasses multiple construction and financing phases and will offer luxury residential and hospitality spaces. The Hotel and Residences are designed around a world-class Arnold Palmer golf course. The Project’s design aesthetic combines modern elements with classic desert architecture.

    This initial financing includes a 140-key Montage Resort, a 200-key Pendry Resort, a shared-services building, and a golf club house as well as several Montage and Pendry branded residences and condominium units. The financing also included up to an additional $100MM of capital for the development of up to 29 Branded Montage Residences and 66 Branded Pendry Condominium Residences. Three additional planning areas that are currently contiguous with the development site will be sold off to third party homebuilders, with the proceeds from these land sales being recontributed into the Project.

    GSP was able to source a lender who not only shared the Sponsor’s vision and passion for the Development, but also recognized the Sponsor’s ability to execute complex, large-scale master planned developments. Despite the complex takedown structure, GSP devised, planned and executed a creative structure that provided the Sponsor with sufficient loan proceeds, while minimizing the Lender’s risk profile throughout the development.

    All terms of the financing are confidential.

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    $115,000,000 of Non-Recourse High-Leverage Senior Construction Financing for the Ground Up Development of a 326-Key Four-Star Radisson BLU Hotel in Anaheim, CA

    December 5, 2018

    Transaction Description

    George Smith Partners placed a $115,000,000 non-recourse senior construction loan for the ground up development of a 326-key four-star Radisson BLU Hotel in Anaheim, CA. The Property is located in the Disneyland/Anaheim Convention Center submarket less than 1 mile from Disneyland Park. Once completed, the 12 story luxury hotel will be one of the few four star offerings available outside the Park and will feature an innovative, modern design. The amenity rich property will include a rooftop pool and deck with unobstructed views of the famous Disneyland nightly fireworks show and surrounding area. Catering to the Park-going family travelers, bunkbeds will be included in over half the rooms, and the hotel will feature a ground floor pool as well as upscale food and beverage offerings.

    Challenges

    The Project will be the first major development east of Interstate 5 in the Disneyland submarket. Additionally, the Hotel is slated to be the 4th Radisson BLU in the United States and will be one of the first four-star offerings available outside of the Disneyland Park.

    Solutions

    GSP focused on the submarket’s underlying fundamentals, including 28 million annual visitors, as well as its resilient occupancy rates and average daily rates that stayed relatively consistent through the recession. GSP also demonstrated that the Hotel is likely to capture an outsize share of the submarket’s 4 million annual international visitors. This is due to Radisson’s strong international branding supported by the fact that nearly all 300 Radisson BLUs are located outside the United States. Finally, GSP highlighted the Hotel’s upscale nature, which currently does not exist outside the Park, family friendly design and strong amenity package.

    These efforts resulted in a high leverage, non-recourse execution.

    All terms are confidential.

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    $17,725,000 Non-Recourse Construction Financing for a 127-Key Cambria-Branded Lifestyle Hotel in the Roosevelt Row Arts District of Phoenix, AZ

    October 10, 2018

    Transaction Description:

    George Smith Partners secured $17,725,000 in non-recourse construction financing for the development of a 127-key Cambria-flagged lifestyle hotel in the Roosevelt Row Arts District of Phoenix, Arizona. This financing facility allowed the Sponsor to begin construction on the first of several projects slated for delivery within Roosevelt Row (Ro2). The Sponsor won a city-led RFP bid earlier this year that provided them with control and ownership of four contiguous city blocks within the core Ro2 area. This was the Sponsor’s first lifestyle branded hotel development and their first hotel development within the state of Arizona. These facts presented a challenge for many groups, despite their extensive experience developing other asset classes, including Monroe 44, the tallest residential building in Arizona.

    GSP sourced a hospitality lender who shared the Sponsor’s vision and excitement about the revitalization of the historic community, recognizing their ability to execute this project under the Cambria Brand. Despite several collateral restrictions presented throughout the application process, GSP was able to facilitate creative alternative scenarios for security of both Lender and Sponsor, ultimately achieving a mutually agreeable solution and additional proceeds to cover the new shortfall. The three year floating rate note was priced at 1 Month LIBOR + 7.50%, and was sized to 68.0% of project costs.

    Rate: 1 Mo. LIBOR + 7.50%
    Term: 3+1+1
    Amortization: Interest Only
    LTC: 68.0%
    Guarantee: Non-Recourse (with standard bad boy carve-outs)

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    Hotel Refinancing: $33,225,000 Bridge Loan – Construction Refinance for a 213-Key Boutique Lifestyle Hotel

    May 16, 2018

    George Smith Partners successfully closed a construction take-out and bridge refinance for a 213-key boutique lifestyle hotel located in the Southwest. The proceeds were used to refinance costlier construction financing, including a mezzanine facility. The loan featured an earnout of additional proceeds as well as a capital improvements budget. The hotel recently opened and thus significant operating history was not available. Additionally, the in-depth rehabilitation elevated the exterior corridor hotel to a new market segment which brought with it unique challenges.

    GSP’s mandate was to source a lender who not only had the ability to execute in a timely fashion, but one who recognized the value in the excellent location and strategic positioning of the Hotel. The selected lender needed to have a deep understanding of all aspects of the deal, from a millennial-focused customer demographic, to the significant food and beverage component reflected in the Hotel’s two restaurants and secret whisky bar.

    The selected lender was able to recognize the unique value proposition of the property and the strong sponsorship involved in the project.

    Rate: L+535
    Term: 3 Years
    Amortization: Interest Only
    Loan to Cost: 83%
    Guarantee: Non-Recourse

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    $25,200,000 Acquisition and Redevelopment Loan for a 120 – Key Select Service Hotel in Davis, CA

    April 4, 2018

    George Smith Partners has arranged $25,200,000 (85% of project costs) of non-recourse acquisition and redevelopment financing for an un-flagged, family run, 120-Key select-service hotel in Davis, California. To date, the Property has not undergone any significant renovations since opening in the 1980’s. Despite the properties’ dated appearance, the hotels close proximity (less than half a mile) to the UC Davis campus has provided it with ample foot traffic resulting in attractive operating metrics. Over the last three years, the property has consistently produced significant positive Operating Income solidifying the Sponsor’s business plan and confirming that extensive property wide renovations would lead to significant value creation. In addition to completely renovating the Property, the Sponsor plans to re-flag the property with a high quality, nationally recognized brand.

    GSP identified a capital provider who was comfortable providing fixed-rate leverage, providing a needed level of security to the client against an increasing rate environment. This structure was a crucial factor in the decision making process for the Sponsor, as the high proceeds level at 85% loan to cost made the project even more sensitive to changes in index rates.

    Rate: 8.25% Fixed
    Term: 60 Months
    Amortization: I/O
    LTC: 85%
    Guarantee: Non-Recourse

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    Hotel Refinancing San Francisco: $45,000,000 Bridge Loan – Construction Refinance for a 131-Key Luxury Lifestyle Hotel in San Francisco

    March 14, 2018

    George Smith Partners successfully closed a construction take-out and bridge refinance for a 131-key luxury/lifestyle hotel located in the heart of the trendy Mid-Market neighborhood of San Francisco. The proceeds were used to refinance costlier construction financing, including a large mezzanine facility. The loan featured an interest reserve, T&I reserve, and a working capital reserve. Additionally, the existing capital stack included Historical and New Market Tax Credits, and EB-5 Capital – adding to the overall complexity of the Transaction.

    GSP’s mandate was to source a lender who not only had the existing wherewithal to understand the complex existing capital stack, but also one who would recognize the value in the unique and strategic positioning of the Hotel. From non-traditional lodging options, to significant Food and Beverage offerings, the Hotel stands out from the traditional hotel offering by spanning over multiple lodging markets: luxury and lifestyle. The seasoned Sponsorship group has a proven track record of developing and operating hotels of similar caliber.

    The selected lender was able to recognize the unique positioning of the property’s offering and the strong sponsorship involved in the project.

    All Terms Confidential

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