SANTA BARBARA, CA-Pacifica Hotel Co. has secured $63 million in first mortgage financing via Los Angeles-based Sonnenblick-Eichner Co. for a group of six oceanfront hotels in California totaling 493 rooms. Elliot Eichner, a principal of Sonnenblick-Eichner Co., tells GlobeSt.com that the borrower sought the six new loans both because some of the existing financing was coming due and in order to lock in lower interest rates. "This was an opportune time to lower the cost of capital," Eichner comments.

The portfolio includes the Blue Sea Lodge in San Diego; the Lighthouse Hotel, Pacifica in San Francisco; the FogCatcher Inn and the Fireside Inn in Cambria; and the Spyglass Inn and Cottage Inn by the Sea in Pismo Beach. The properties, three of them full service and three of them limited service, are rated Three-Diamond by the American Automobile Association.

The financing was for a 10-year fixed rate priced in the low 100 basis points range over the 10-year Treasury. The financing is interest-only for the entire term and was provided by a European-based financial institution. The properties were not cross-collateralized.

Patrick Brown, also a principal of Sonnenblick-Eichner, notes that the hotel debt capital markets "did not differentiate between the full and limited service assets in the portfolio in terms of pricing for this transaction." Historically, the capital markets have favored full service hotels over limited service properties and have typically provided more favorable rates for the full service properties.

In addition to the quality of the individual hotels, the portfolio attracted favorable financing terms because the hotels represent a unique group of properties along the California Coast with "severe barriers to entry" for new hotel developments, Eichner points out. He describes the hotel financing market as "very, very strong," with "a ton of liquidity out there for existing properties, and for properties to be built, provided the property meets the underwriting criteria."