KENNER, LA-A Michigan-based hotel group has made its first play in Louisiana, acquiring the 122-room Hilton Garden Inn New Orleans Airport and 106-room Fairfield Inn New Orleans Airport. The buyer has borrowed $14.6 million to acquire and upgrade the properties.
Trans Inns Management Inc. has bought the Fairfield Inn at 1801 32nd St. and adjacent Hilton Garden Inn at 4535 Williams Blvd. from a real estate investment company in New Orleans. Greg Morris, managing director with Premier Capital Associates LLC in Bellevue, WA, says the hotels were considered new although they were built in the 1990s, significantly damaged during Hurricane Katrina in 2005 and rebuilt. "These two went through about a year-long renovation process after the hurricane and re-opened in the middle of 2006," explains Morris, who arranged the RBC Capital Markets loan.
Premier Capital's Jeff McKee tells GlobeSt.com that obtaining financing had its ups and downs, partly because of the properties' locations and concerns over hurricane repeats. Additionally, the loan was a CBMS transaction so there were some issues due to the subprime fallout in the capital markets. "The underwriting criteria changed, and we had to navigate through those issues, which made completing this loan an interesting challenge," McKee says. At the end of the day, the deal closed with a loan to cost in the 70% to 75% range.
The brokers declined to provide loan specifics, but they did acknowledge that comparable hospitality loans tend to have five- to 10-year terms, 25- to 30- year amortizations and interest rates between 6.75% and 7.25%.
According to the Premier Capital team, the hotels' occupancies are 70% to 75%. Their average daily room rates are $99 and $134.
McKee and Morris say both hotels will continue operating under their flags, with the Farmington Hills, MI-based Trans Inn Management taking over the day-to-day operations. Morris says the hospitality group primarily has been a Midwest operator, but is trying to grow its portfolio in other markets. He adds it is looking to acquire higher end brands like Marriott, Hilton and International Hotels Group.
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