WILLIAMSBURG, VA-SoTHERLY Hotels has secured $57 million in refinancing for its Crowne Plaza Hollywood Beach Resort in Hollywood Beach, FLA. The REIT has a 25% stake in the hotel via its joint venture with the Washington, DC-based Carlyle Group.
Bank of America Merrill Lynch is providing the interest-only, non-recourse first mortgage. The loan is a floating rate based on the one-month LIBOR plus 3.95%, maturing in January 2016. The proceeds from the loan have been used to repay the existing first mortgage and to make distributions to the JV partners. SoTHERLY used approximately $3.5 million of its share of the proceeds to pay off its debt related to the JV.
The refinancing caps off what has been a significant year for the REIT, which rebranded itself in April. Formerly it was called MHI Hospitality.
The REIT completely restructured its balance sheet and decided to expand its footprint in the southern states, explained Drew Sims, chairman and CEO of SoTHERLY Hotels in a video posted on NAREIT’s website. The company decided it would shore up its foothold in Atlanta and then focus on such markets as Houston, Charleston and Charlotte.
By November the REIT had snapped up the Crowne Plaza Houston Downtown Hotel for $30.65 million in cash and 32,929 units of limited partnership interests in Sotherly Hotels LP.
As a part of the transaction, SoTHERLY closed on a $21.5 million loan with Mutual of Omaha Bank with a fixed interest rate of 4.50% and amortizes on a 25-year schedule.
Sims also told NAREIT that the lack of new supply in the sector will help to ensure continued growth.
“We’re not seeing a lot of new product and as a result of increased demand we’re actually in a very good position for extended growth,” he said. “Our belief is that in the next two or three years we should see a continued growth in rates, and occupancy has already stabilized at a very healthy level.”