For the Right Hotels, Lenders Are Bullish

Lenders are still bullish in hotel deals—as long as it is the right hotel. Natixis, a financial services firm, has provided a $93 million loan to The Yucaipa Companies for the LINE Hotel, a 384-room lifestyle hotel located in the Koreatown neighborhood of Los Angeles. The hotel was one of the catalysts to revamp the market, which has seen growing multifamily demand. Now, the hotel owner is planning an expansion across the US. According to Natixis, the property is a great deal and great timing for the lender.

“We were attracted to the deal because of the strong sponsorship and hotel management company and the location in a core market within a submarket that is undersupplied in hotels,” Greg Murphy, Head of Real Estate Finance for the Americas at Natixis, tells GlobeSt.com. Hotel is still in ramp-up and attracted to the hotel concept, the emerging brand expansion, and our basis in the project. This was a direct deal from the client that was not actively marketed. It was good timing on our part, toured the project at ALIS and came to terms soon after.”

While the property was a driver for growth in the market, it has an interesting history that might have made the lender cautious about this deal. “The Property was acquired by the Borrower in August 2011 out of bankruptcy auction from the Lee Family Trust for $35 million,” says Murphy. “Shortly after acquisition, the Property, then branded as the Wilshire Hotel, underwent a $66 million comprehensive conversion to an upper-upscale, full-service, boutique hotel transforming it into The LINE LA. The gut renovation included updates to the building structure, a full revamp of the food and beverage outlets, and updates to the public areas, meeting space, and rooms. The new updates with this Loan are for the repositioning of the ground floor F&B and lobby space. The Ballroom was just renovated too and that included opening the space to the backyard patio area for events.”

The $93 million loan will be used to refinance an existing loan to fund improvements for the property. The terms of the loan were not disclosed, but Murphy did say that the firm was able to meet their requests. “They were looking for max proceeds and we effectively solved their request with strong capital market execution by bringing in a mezzanine partner that could meet their proceed needs without making the capital costs prohibitively expensive,” he says.

The brand will expand to Washington DC in September and Austin sometime next year. After that, the firm has plans to expand throughout the US.

Lenders are still bullish in hotel deals—as long as it is the right hotel. Natixis, a financial services firm, has provided a $93 million loan to The Yucaipa Companies for the LINE Hotel, a 384-room lifestyle hotel located in the Koreatown neighborhood of Los Angeles. The hotel was one of the catalysts to revamp the market, which has seen growing multifamily demand. Now, the hotel owner is planning an expansion across the US. According to Natixis, the property is a great deal and great timing for the lender.

“We were attracted to the deal because of the strong sponsorship and hotel management company and the location in a core market within a submarket that is undersupplied in hotels,” Greg Murphy, Head of Real Estate Finance for the Americas at Natixis, tells GlobeSt.com. Hotel is still in ramp-up and attracted to the hotel concept, the emerging brand expansion, and our basis in the project. This was a direct deal from the client that was not actively marketed. It was good timing on our part, toured the project at ALIS and came to terms soon after.”

While the property was a driver for growth in the market, it has an interesting history that might have made the lender cautious about this deal. “The Property was acquired by the Borrower in August 2011 out of bankruptcy auction from the Lee Family Trust for $35 million,” says Murphy. “Shortly after acquisition, the Property, then branded as the Wilshire Hotel, underwent a $66 million comprehensive conversion to an upper-upscale, full-service, boutique hotel transforming it into The LINE LA. The gut renovation included updates to the building structure, a full revamp of the food and beverage outlets, and updates to the public areas, meeting space, and rooms. The new updates with this Loan are for the repositioning of the ground floor F&B and lobby space. The Ballroom was just renovated too and that included opening the space to the backyard patio area for events.”

The $93 million loan will be used to refinance an existing loan to fund improvements for the property. The terms of the loan were not disclosed, but Murphy did say that the firm was able to meet their requests. “They were looking for max proceeds and we effectively solved their request with strong capital market execution by bringing in a mezzanine partner that could meet their proceed needs without making the capital costs prohibitively expensive,” he says.

The brand will expand to Washington DC in September and Austin sometime next year. After that, the firm has plans to expand throughout the US.