Across the U.S., Hotel Transactions to Watch

NATIONAL REPORT—Construction financing was secured for two new-build hotel projects—one run by Destination Resorts and the other by Joie de Vivre; and there’s more. Here’s a look at recent activity:

Financing Secured for Two New-Build Beachfront in CA

HFF announces $155 million in construction financing for the ground-up development of two oceanfront hotels in Oceanside, CA.

Working on behalf of the developer, S. D. Malkin Properties, the HFF team placed the construction financing with Bank OZK and an East Coast-based institutional investor.

The two hotels will be developed over a 2.75-acre, two-block site located along Mission Ave. and North Pacific St. Both properties will have immediate access to the beach and, combined, have 387 rooms, 85% of which will have water views.

One of the hotels will be operated by Destination Resorts and the other by Joie de Vivre—both brands are owned by Hyatt. The hotel operated by Destination Resorts will have 226 rooms, a signature restaurant, indoor/outdoor lounge, pool with ocean views, luxury spa and more than 20,000 sq. ft. of meeting and event space. The hotel operated by Joie de Vivre hotel will have 161 guestrooms, a rooftop pool and bar, restaurant, public garden and 3,000 sq. ft. of retail space and feature the historic circa 1887 Graves House, a local icon commonly known as the “Top Gun” house, which will be completely renovated and opened to the public.

PMZ Realty Capital Secures CMBS LOAN for Tru by Hilton

PMZ Realty Capital LLC has secured the first-ever CMBS loan for Tru by Hilton property. PMZ Realty Capital specializes in hotel real estate investment banking nationwide, with an expertise in sourcing capital.

“PMZ Realty Capital is thrilled to complete the very first Tru by Hilton capital market transaction using a CMBS loan,” said Michael H. Sonnabend, managing member, PMZ Realty Capital. “The CMBS loan met RevPAR Development LLC’s strategic goals. Customer success is our main focus and by working closely with lenders, PMZ Realty Capital guided a successful outcome.”

This CMBS loan was a 10 year, non-recourse loan with 30-year amortization. Opened in McDonough, GA in 2017, the 90-room, the four-story hotel had limited operating history and the challenge was convincing underwriters to do the cash out refinancing. Working with underwriters, PMZ Realty Capital offered guidance on the niche of the hotel, Hliton’s brand strength, and the operating capabilities of RevPAR Development LLC.

“This cash out financing is a boost for RevPAR Development LLC,” said Pete Patel, president/CEO,
RevPAR Development LLC. “This is our second transaction using PMZ Realty Capital in the last 12 months.  You quickly appreciate PMZ’s steady guidance, detailed process and proactive advocacy to complete the refinancing quickly. Completing this transaction allows RevPAR Development LLC to grow and to increase financial flexibility.”

HFF Arranges Sale of Nantasket Beach Resort

Holliday Fenoglio Fowler L.P. sold the 107­-room Nantasket Beach Resort in the suburban Boston-­area community of Hull, MA. The HFF team represented the seller, Nantasket Resort Inc., and procured the buyer, Newport Hotel Group.

The property is positioned 12 miles south of Boston and is the largest full­-service hotel serving the South Shore. Renovated in 2016, the oceanfront hotel offers private balconies with ocean views, whirlpool baths, two restaurants—the Paragon Grill and Surf Lounge—an indoor heated pool, jacuzzi, fitness center, business center, the Beach Shack, an arcade and 10,000 sq. ft. of meeting space.

Knighthead Originates $36M Loan to Refi Atlanta Hotel

Knighthead Funding LLC has provided a U.S. subsidiary of Switzerland-based private real estate investment firm Acron with $36 million in short-term first mortgage debt to refinance a newly constructed luxury destination hotel at the Hartsfield-Jackson Atlanta International Airport.

The financing is secured by the Kimpton Overland Hotel, formerly Solis Two Porsche Drive, a full-service, 214-key hotel with 9,500 sq. ft. of meeting space, a high-end restaurant, rooftop and lobby lounges, indoor pool, and fitness center. Proceeds from the three-year, fixed rate loan will be used to take out the existing construction loan and provide working capital for the continued stabilization of the Acron-developed hotel, which opened in November 2017.

Kimpton Overland is adjacent to the $100 million Porsche Cars North America headquarters, the first major development within the 122-acre Aerotropolis Atlanta.

Sold: Residence Inn by Marriott Anaheim Hills Yorba Linda

The Residence Inn by Marriott Anaheim Hills Yorba Linda, a 128-room, select-service, extended-stay hotel in the Orange County community of Anaheim, CA, has sold for $25.5 million.

The HFF team arranged the sale on behalf of an institutional seller.  The hotel was purchased by Pacifica Hotels, which is located in Aliso Viejo, CA.

Completed in 2002, the wood-framed property comprises one common area building and two guestroom buildings. The hotel has a meeting room, complimentary breakfast, evening social event, outdoor terrace with built-in grill, outdoor swimming pool, fitness center and business center.

J Street Purchases Hotel Karlan

HREC Investment Advisors arranged the sale of the 174-room, full-service Hotel Karlan – A DoubleTree by Hilton located in San Diego.

The buyer is J Street Hospitality, a San Diego-based hotel developer and owner of premium-branded hotels. Azul Hospitality Group has been retained to manage the hotel. Mike Armstrong, principal in HREC’s San Diego office, exclusively represented the seller during the transaction.

Encore Buys Home2 Suites Pensacola, FL

Hunter Hotel Advisors sold the Home2 Suites Pensacola, Florida to Encore Hospitality. General Hospitality Services opened this 106­-key hotel in December 2017.

“General Hospitality Services is a repeat client of Hunter Hotel Advisors. They have an eye for finding assets in markets that are on the verge of exploding and this is the case for the Home2 Pensacola,” said Shamir Patel, VP, Hunter Hotel Advisors. “You have a top-tier new-construction hotel in a market that has an incredible number of in­-place demand generators in an almost untouched market. Encore Hospitality took advantage of this and with their years of experience and expertise, will make this the premier limited service hotel in the market.”

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