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MONTEREY, CA-The owner of the Marriott Monterey Hotel has refinanced the 341-room property with a $61.5 million loan. The loan has allowed San Carlos Associates to recapture equity while increasing the amount of cash thrown off by the property, according to Los Angeles-based Sonnenblick-Eichner Co., which arranged the financing.

San Carlos Associates includes investors from Monterey and Seattle. The 10-year, fixed-rate, no-interest loan is priced in the low 100-basis-point range over the 10-year treasury and is for 75% of the property’s perceived value. The previous financing was less leveraged and was not interest-only.

“They realized a bunch of equity they had and, due to the interest-only component, a tremendous amount of cash flow,” S-E principal David Sonnenblick tells GlobeSt.com.

The 10-story Marriott Monterey sits adjacent to the Monterey Conference Center in the retail district of Downtown Monterey. The AAA-rated Four-Diamond hotel contains approximately 16,500 sf of meeting space, a spa, two restaurants, and subterranean parking for 142 cars. The Monterey area hosts over 4 million visitors per year.

The loan was funded by a European-based financial institution. “Given the strength of the hotel debt capital markets and the hotel’s strong historical operating performance, we were able to convince the lender to use projected cash flow instead of the trailing twelve in order to achieve maximum loan proceeds,” says S-E principal Patrick Brown.

The Seattle component of San Carlos Associates is believed to be related to Wright Hotels, a Seattle-based hotel and motel management services company. The president of Wright Hotels is Stuart Rolfe, who recently became investors in Seattle-based Coastal Hotel Group, a hotel management and development services company that was recently acquired by its senior management. The company, which manages seven hotels in four states including four in Monterey, was acquired from former owners Don Simplot and Doug Toms.

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