REIT Secures $120M Refi on Four Seasons

WASHINGTON, DC—Strategic Hotels & Resorts has closed on a $120 million limited recourse loan secured by its Four Seasons Washington DC hotel to refinance the $130 million previously encumbering the property.

The REIT reports that the interest rate is based on a floating rate of LIBOR plus 225 basis points. The loan has a three-year initial term with two, one-year extension options. Deutsche Bank Securities originated the financing.

During the REIT's most recent earnings call in May CEO Rip Gellein noted that the Four Seasons in DC experienced a 12% RevPAR decline year over year – but went on to say that was primarily a "reflection of a very tough comparison to the first quarter of last year when the hotel was the beneficiary of the presidential inauguration that added more than $650,000 in revenue in January alone as a result of five-day average rates between $1,300 and $1,900 a night."

Also in general, the REIT's balance sheet is solid, as outlined by its executives during the call. For instance, in April, Strategic Hotels closed on a new $300 million unsecured credit facility, with a $100 million accordion feature, that was priced approximately 100 basis points lower than its prior facility of the same size—and that was mortgage secured.

CFO Diane Morefield suggested that the REIT would be refinancing some of its properties during the call. "We continue to evaluate potential refinancing opportunities on some of our mortgage debt, given the current strength of the credit markets and hope to have more to announce on that in the near future," she said.