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TROY, MI-A private Cleveland group has refinanced the local Homewood Suites, a 150-room hotel, for $13.5 million. The property, built in 2002, appraised for $17 million and was sought after by several lenders.

The property is a four-story hotel, with an indoor heated pool, a fitness center, and an executive business center with approximately 1,200 sf of meeting space, in what used to be the state’s best office market. According to a recent CB Richard Ellis first quarter market report, the office vacancy rate in Troy is now at 27.3%, due to major corporations consolidating elsewhere or downsizing in the city. The shift in demand seems to take geographic lines, as only those office markets west and north of I-275 are enjoying less than 26% vacancy.

Vista Capital Co., based in Santa Monica, CA, arranged a 10-year, interest-only, fixed-rate loan for the hotel, to replace the floating-rate loan the hotel had been operating with, says Vista principal Zak Selbert. He says the company was able to draw a lot of attention to the Detroit-area hotel. His company arranged an 80% LTV for the Cleveland-based owner, which Selbert refused to disclose.

“Right now, it’s just not a popular area, partly because of the auto industry,” Selbert says. Detroit is also not as popular a vacation spot as the coasts or warmer climates. But Selbert says the property has proven itself, with occupancy and returns increasing in the past few years, and has shown itself to be competitive with other properties in the area. This is the first deal Vista has done in Michigan, Selbert says.

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