SANTA BARBARA, CA-Pacifica Hotel Co. has secured the second stage of $88.5 millon in first mortgage financing for nine hotels via Los Angeles-based Sonnenblick-Eichner Co. Elliot Eichner, a principal of Sonnenblick-Eichner Co., tells GlobeSt.com that the borrower sought the new financing because some of the existing financing was coming due and the time was opportune to lock in lower rates.
In addition, Eichner points out, this $25.5 million second stage follows a first stage of $63 million in financing for six of the hotels that Sonnenblick-Eichner arranged late last year. "Just a few weeks after we closed the first financing, they looked at their portfolio and said that since there was such great execution on the first financing, they had some more properties that should be refinanced," Eichner explains.
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.
The 679-room portfolio includes three full service and six limited service hotels. The properties include the Blue Sea Lodge, San Diego; the Innat Venice Beach, Venice; the Holiday Inn Express, Marina Del Rey; theLighthouse Hotel, Pacifica (San Francisco); the FogCatcher Inn and theFireside Inn, Cambria; and the Spyglass Inn, Cottage Inn by the Sea, andSandcastle Inn, Pismo Beach. The properties are rated Three-Diamond bythe American Automobile Association.
Eichner describes the properties as "a unique portfolio" that was able to attract favorable terms due to the properties' strategic locations and barriers to entry for new hospitality developments along the California coast, including Venice and Marina Del Rey. The hotel financing market remains "very, very strong," Eichner says, with "a ton of liquidity out there for existing properties, and for properties to be built, provided the property meets the underwriting criteria."
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