DTZ Arranges Loan for Hawaii Hotel

KAPAA, HAWAII-DTZ has arranged a repositioning loan for the 206-key Kauai Sands Hotel in Kapaa, Hawaii. The loan will facilitate a comprehensive overhaul of the property including exterior renovations, landscaping, extensive room renovations, and complete FF&E to upgrade the hotel from 2 stars to 3.5 stars.

According to SVP/managing director Jeffrey Donnelly who leads DTZ's Real Estate Investment Banking Group out of New York, and who oversaw the capital raise: “This is an exceptionally well-sited property on a white sand, swim-out beach that needs and deserves extensive renovations. There were a couple of aspects of the deal that made this financing a little harder to place. One of the challenges was that since our clients had acquired the hotel through a foreclosure auction, the financing was at a high loan-to-cost ratio, but at a very low loan-to-value ratio, which narrowed our universe of prospective lenders. We were successful in finding a lender that understood that the sponsor had simply bought the property right, and that also shared the borrowers' belief in its upgrade potential.”

DTZ VP Marc Civitillo added, “The property had been built in the 1970's and needed help. However, its age was also part of its competitive advantage in that part of the property was sited much closer to the beach than island zoning currently allows. Furthermore, the property's grandfathered status also allows for one of the island's only true on-the-sand dining experiences. Our lender understood the uniqueness of the property and shared our client's vision for its repositioning.”

The DTZ team arranged the two-year bridge financing in order to give the sponsors ample time to complete the property repositioning. The property will then be refinanced with new, longer term permanent financing.

Donnelly concluded, “Even though we were 5,000 miles and six times zones away, we were pretty sure that we would find our financing source right here in New York; and that's exactly how it transpired. We have a deep and wide network of funding sources to draw from, a great number of which are located right here, within a 10-block radius of our office.”

As part of the broader Capital Markets division of DTZ, Donnelly's Real Estate Investment Banking team is responsible for sourcing and placing debt and project finance for a wide variety of real estate transactions – ranging from acquisition loans and refis to more complex structured financings, workouts, DPOs and restructurings. The team is active throughout the United States, and internationally; and is currently handling assignments as far a field as Anguilla, Dominican Republic, and Israel. According to Donnelly, “We are a young and aggressive division and we are not afraid to roll up our sleeves and work on the tougher, hairier assignments. We are providing funding solutions for the whole capital stack, and are hungry for compelling projects across all asset classes.”