$35M Bridge Loan Retires Construction Financing

GLENDALE, CA-The owner of the 272-room Embassy Suites Glendale has a new $35 million first mortgage that paid off the construction loan for the property at 800 N. Central Ave., according to Holliday Fenoglio Fowler, which arranged the financing. The $35 million bridge loan is a 36-month, adjustable-rate loan with Prime Finance, a commercial real estate finance company with offices in San Francisco, Chicago and New York.

HFF director Tina Derderian worked on behalf of Kam Sang Co. to secure the new financing. Kam Sang developed the hotel and also manages it.

The hotel is in Downtown Glendale with access to the Ventura Freeway (134) and Burbank, Los Angeles and Pasadena. Completed in 2008, the property features a pool, laundry, full-service restaurant, business center and 8,000 square feet of meeting space, including a 5,000-square-foot ballroom. Kam Sang Co., established in 1979, develops, acquires and manages hospitality, retail, residential and mixed-use properties in Southern California.

The financing of the hotel comes at a time when the recovery of the US lodging industry continues to gain momentum, according to recent industry reportsl. Colliers PKF Hospitality Research, for example, said recently that the hotel market has been “buoyed by a sustained expansion in the demand for rooms across the country.”

Thanks to this improvement, PKF-HR has edged up its forecasts for US hotel performance for 2010 and re-affirmed the outlook for 2011. In the recently released December 2010 edition of its Hotel Horizons report, PKF-HR forecasts that lodging demand will grow 7.8% in 2010, nearly four times greater than the 2% increase in hotel supply, resulting in a 5.7% rise in occupancy.

The PKF-HR outlook for 2011 has also improved, albeit to a limited degree. The December 2010 Hotel Horizons forecast calls for a 3.3% increase in demand, which will drive a 6.3% rise in hotel RevPAR next year. These are 0.1% and 0.3% higher, respectively, than the firm’s previous forecast.