Countrywide Provides $91M Acquisition Loan

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FALLS CHURCH, VA-Countrywide Commercial has originated a $91-million floating rate loan to JER Partners for its acquisition in March of Fairview Park Marriott, a 394-room full-service hotel in Fairview Office Park, as was reported by GlobeSt.com.

This transaction was significant to the Calabasas, CA-based lender beyond the size of the transaction. It was the first loan it closed with JER, according to Countrywide Commercial SVP Kyle Jeffers. “We hope to do a lot more business with them.” He tells GlobeSt.com the two firms are discussing a few additional deals but declined to elaborate.

The loan closed this week; JER, a private equity investment arm of JE Robert Cos., had originally acquired the hotel asset with its line of credit, Jeffers says.

The financing for the Fairview Park Marriott is fairly routine; a standard first mortgage loan with no mezzanine debt, it has a five-year term with extension options and is priced at spread over Libor, Jeffers says. JER plans to spend an additional $5 million in capital improvements on top of $7 million that the seller, Bethesda, MD-based Host Hotels & Resorts, had spent recently renovating the guestrooms and corridors. Additional renovations will include redesigning the lobby, restaurant and meeting space.

Hospitality lending comprises a significant portion of Countrywide’s portfolio–over 20% of its loan production in 2006 involved hospitality properties, according to Warren de Haan, managing director.

For example, close to the same time it closed the loan for JER, it also originated a $219-million floating rate loan to Trinity Investments for Kahala Hotel & Resort, a 13-story, 343-key, 382,000-sf hotel in Waikiki, HI.

However supply is beginning to catch up with demand in many markets, Jeffers says, prompting some lenders to be more cautious in their diligence and underwriting. “We are not turning down deals; we are just being smart and analyzing what the new supply means to the market in which we are lending.”

In that respect at least, the Fairview loan was a no-brainer: the hotel is the only one permitted in the 2.1-million-sf office park.