LOS ANGELES—Provenance Hotels has secured a $236 million loan through a CMBS lender for a seven-property hotel portfolio in the Pacific Northwest and Nashville, TN. The funds were used to purchase the properties in conjunction with Provenance Hotel Partners Fund I, a $525 million investment vehicle.

"They were looking for long term fixed rate financing given where interest rates were at the time," Elliot Eichner, a principal at Sonnenblick-Eichner Co., tells GlobeSt.com. "They had loans that were maturing in 2016 and 2017, so it was economically beneficial to pay the prepayment associated with the existing loans and at the same time not risk the possibility of higher interest rates in the future." Sonnenblick-Eichner secured the funds on behalf of the borrower.

Six of the loans were structured with 10-year terms and were non-recourse and cross-collateralized. The seventh loan was a non-recourse LIBOR-based facility. Rather than acquisition financing, Provenance used the funds to acquire its partner's equity interest in the property and to fund renovation and repositioning. Although the borrower went with a CMBS lender, there was also interest from life companies to fund the loan. "We had tremendous interest from most of the CMBS providers of long term fixed rate financing," adds Eichner. "We had some life insurance company interest but the CMBS execution provided higher LTV loans."

The hotels in the portfolio include Hotel Lucia in Portland, OR; Hotel deLuxe in Portland, OR; Sentinel in Portland, OR; Westin Portland in Portland, OR; Hotel Max in Seattle, WA; and Hotel Preston in Nashville, TN; and the Roosevelt Hotel located in Seattle, WA. The portfolio totals 1,072 rooms.

According to Eichner, this transaction shows the liquidity for hotel product. "Despite the uncertainty in the capital markets, there is still abundant liquidity for hotel debt," he says. The company is familiar with securing large sums of capital for hotel product. Last year, the firm helped Pacific Hotels secure $153 million.

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