TYSONS CORNER, VA-JBG Cos. has secured reconstruction debt financing in what the broker, Jones Lang LaSalle’s Mathew Comfort, calls a seminal deal. Mesa West Capital is providing $50 million in a floating-rate loan to JBG to renovate JBG’s recently acquired $84.5-million Sheraton Premiere, which the firm acquired for cash at the end of last year. JBG plans to use the proceeds to renovate the property.
Mesa West principal Raphael Fishbach, who heads the firm’s New York City office, originated the loan. Besides Comfort, JLL’s Jeffrey Davis, Gilda Perez-Alvarado and Mike Huth structured the deal. The debt markets have gone through a tremendous recovery, Comfort tells me, but they haven’t quite reached all corners of the construction and redevelopment market--especially for hotel properties that are in transition like the Sheraton Premiere. In fact, balance sheet lenders have all but been absent from the hotel construction finance market for the last 24 months. “This deal will open the door for more construction and turn around financing,” he predicts.
The deal closed at a competitive rate, Comfort notes, with the amount totaling 50% of the cost of the acquisition plus renovation. “It was a competitively bid process with four different lenders chasing the deal.” FelCor Lodging Trust sold property last December to JBG as part of its larger national asset disposition strategy. It was owned in a JV between FelCor and Starwood Hotel & Resorts Worldwide. FelCor received $42.25 million in gross proceeds, as there was no debt associated with the hotel.
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