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CHICAGO-Tramz Hotels Group, headquartered in Warrenville, NJ, has received $38 million in financing for a hotel portfolio, which was arranged by Aries Capital, based here. Aries arranged the loan for a seven-hotel portfolio of Hampton Inn properties, says Andrea Riegsecker, executive vice president of Aries Capital. The financing was provided by JP Morgan Chase. Riegsecker closed the transaction.

The loan-to-value for the financing is about 70% overall, Riegsecker tells GlobeSt.com. The interest rate for the seven-year loan is 6.9% with a 25-year amortization. The financing is structured so that there is no penalty for paying off the loan during the last two years of the seven-year term, she says. In addition, “The financing was structured so that mezzanine financing could be placed on the hotels for renovations in the future,” Riegsecker says. The existing loan for the hotel portfolio was due to mature this fall.

The hotels are located in Albuquerque; Amarillo, TX; Eden Prairie, MN; Greensboro, NC; Greenville, SC; San Antonio; and Syracuse. “They bought into the ownership two years ago,” Riegsecker says. The franchise agreements for the hotels are due to expire within five years and Tramz Hotels does not plan on renewing the franchise agreements, Riegsecker says. Tramz will be renovating the hotels when the franchising agreements expire, although there are not specific plans for the renovations at this time, she says. The hotels will either be re-flagged or be sold, which is why the financing was structured with no prepayment penalty during the last two years.

Aries has arranged financing previously for Tramz Hotels, she says. In addition, the financing would be considered a good investment for JP Morgan Chase because “The hotels [in the portfolio] have strong operating numbers with an upward trend,” she says. Tramz Hotels, which was founded in 1987, owns and operates 20 hotels in Texas, New Mexico, New York, Ohio, South Carolina, North Carolina, Minnesota and Virginia.

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