WASHINGTON, DC-Local institution Cardinal Bank provided the acquisition funding for the recent trade of Georgetown Inn, a boutique hotel consisting of 96 newly-renovated European-style guest rooms. Blackstone Group sold the asset for $35.1 million to a buyer who obtained a $23.4 million five-year loan with a 25-year-loan amortization. Walker & Dunlop senior vice president of Capital Markets Andrew Coleman helped arrange the financing.
The deal illustrates an interesting opportunity that has opened up for local banks hoping to secure a piece of the hospitality industry, Coleman tells GlobeSt.com. “They are filling a void created by the slowdown in the CMBS market,” he says. “While CMBS players can close on these smaller deals, their pricing is still too wide compared to local and regional banks.”
Smaller banks are also competitive with the life companies, he continues, which are seeking lower LTVs and mainly interested in the major flags located in downtown areas. “So if you are an unflagged hotel you can get cheaper financing now using a local banking partner,” he concludes.
The Georgetown Inn traded close to the same time that another boutique hotel in Georgetown sold--the Hotel Monticello in an off-market transaction.
Coleman anticipates similar deals to close by year’s end, at least based on what is in Walker & Dunlop’s pipeline. “We are working on a handful of refinancings, from unflagged hotels to full flags,” he says.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
