ANNAPOLIS-Chesapeake Lodging Trust has refinanced a $130 million term loan secured by the Le Meridien San Francisco and the W Chicago – City Center. The loan, which was scheduled to mature on July 8, 2014, was refinanced with two individual fixed-rate mortgage loans with an aggregate principal amount of $185.5 million.
The first new loan is a seven-year, $92.5 million mortgage loan secured by the 360-room Le Meridien San Francisco. It was provided by PNC Bank, N.A. and carries a fixed interest rate of 3.50% per annum, with principal and interest payments based on a 25-year principal amortization.
The second new loan is a 10-year, $93 million mortgage loan secured by the 403-room W Chicago – City Center. It was provided by Goldman Sachs Mortgage Co. and carries a fixed interest rate of 4.25% per annum, with principal and interest payments based on a 25-year principal amortization.
The REIT’s leadership indicated it secured the refinancing in part because of anticipation of rising interest rates. “Considering the recent rise in U.S. treasuries and interest rates generally, we are extremely pleased to announce the execution and timing of our term loan refinancing,” says Douglas W. Vicari, the REIT’s EVP and CFO, in a prepared statement. “We were able to lock in attractive long-term, fixed-rate debt at a weighted-average interest rate of 3.88%.”
Rising property values also weighed in Chesapeake Lodging’s favor as it closed on this transaction. Vicari notes that hotel acquisitions, made in 2010 and 2011, had appreciated enough “to generate significantly greater proceeds as a result of the refinancing.”