GREENWICH, CT-Starwood Property Trust and Fortress Credit Corp., an affiliate of New York City-based Fortress Investment Group LLC, report they have co-originated a $285-million loan on a portfolio of 123 Red Roof Inn properties.
The loan is sponsored by a joint venture between Five Mile Capital Partners LLC and Westmont Hospitality Group. The Red Roof Inn properties total 14,585 rooms and are located in 29 states. Starwood and Fortress state that the loan upsizes and extends a $275-million debt package Fortress provided to Five Mile Partners and Westmont Hospitality in August 2011 to acquire the portfolio. Starwood purchased the $185-million A-note on the initial loan. The current loan is a 50%-50% pari-passu structure, with both lenders sharing economics through the last dollar of debt. The sponsors of the loan plan to use the capital to continue to upgrade the properties. Starwood and Fortress affiliates securitized a $200-million senior A-note to increase their investment returns and retained equal portions of the loan’s related B-Note.
“We are pleased to partner with Fortress to extend the loan to Five Mile and Westmont with a new structure that allows them to best execute their business plan of renovating the portfolio and enabling select property releases,” says Boyd Fellows, president of Starwood Property Trust. “This transaction is a prime example of an advantage we both have as balance sheet lenders when our clients want to optimize a financing before it has matured.”