One-Year-Old Hotel ZaZa Collateralizes $25M Refi

The hotel development company, led by Charles Givens, secured a 10-year, fixed-rate interest loan at a 65% loan-to-value ratio from CWCapital LLC of Needham, MA, Mike Bryant, senior vice president in Dallas for the Horsham, PA-headquartered GMAC Commercial Mortgage Corp., tells GlobeSt.com. He and GMAC senior vice president Don Marshall in Richmond, VA, originated the loan while CWCapital's Chip Brown in the New York City office packaged the deal for the lender.

Bryant says at least eight quotes, primarily CMBS lenders including GMAC, were under review in the 75-day process to secure capital to retire Hotel ZaZa's construction loan. Hotel ZaZa is in "a very strong market and has very strong sponsorship in addition to very strong numbers," he says. "He had all the components." But, Bryant adds, CWCapital's use of an in-house, B-piece buying group gave it the edge when terms were compared.

Hotel ZaZa sits at 2332 Leonard St. on slightly more than an acre in Uptown, where Givens would like to build some condos with the same pizzazz as the emerging hotel brand. Meanwhile, Mark Van Hartesvelt, principal of the hotel's management company, Gemstone Resorts International of Park City, UT, has been scouting Texas and Las Vegas for a second site. The refinance, he stresses, is just that--a simple refinance with no pullout for land acquisition.

"We are actively looking. We are hoping to have an announcement in two to three months," Hartesvelt says. "Texas makes sense because we have some brand awareness." It might take as long as six months, but he's certain a second site will be in hand this year. "We've exceeded our expectations by quite a bit. It's obviously successful," he says. "The second one has to be the right one so we're being a little cautious." There have been several trips to Vegas, but he says the high price per acre is keeping the development team from opening talks.

The flagship hotel, with its "yen for zen" and 147-room boutique size, has been a magnet for concert stars like Sting and John Mayer for their stays in Dallas. The four-story Hotel ZaZa is 102,010 sf of eclectic space, with themed suites like Exotica and Shag-a-delic and plush guestrooms, each costing roughly $150,000 to outfit. The 180-seat Dragonfly features celebrity chef Stephan Pyles. Prior to its December 2003 opening, room prices were pegged at $225 per night to $1,100 for the presidential quarters.