STATE COLLEGE, PA—While Shaner Hotel Group has a host of properties in its development pipeline, new projects represent only one area of growth for the owner/operator, which has now begun deploying capital from its hospitality finance company.
Formed in June of 2013 with a $100-million capitalization, Shaner Hospitality Finance recently completed an $8.25- million investment in the 203-room Southbridge Hotel & Conference Center in Southbridge, MA. The company purchased the existing mezzanine facility and provided additional funds to resize the capital structure and pay down debt. The investment represents the first completed financing transaction since Shaner Hospitality Finance was formed.
Plato Ghinos, president of Shaner Hospitality Finance and Shaner Hotel Group, based here, explained the motivation of the financing vehicle. “It’s a pure yield play for us. Wearing our other hat, being in the hotel business and running hotels every day, you kind of see where the opportunity in the market is. We’re trying to fill in the gap where lenders stop,” he said, further adding, “We underwrite it as hotel owners, not as buyers. We don’t need to get appraisals; we don’t need all that typical bureaucratic requirements a lender needs. It’s a hotel owner lending money to other hotel owners.”
Ghinos noted the company had similar funds in 2008 and 2009 and said despite being “flooded with developer requests,” the program is confined to existing properties. He also noted it’s set up as a five-year program to “give enough time for the asset to start producing returns.”
Ghinos further identified some instances where funding could be particularly useful. “You have the situations where a lot of smaller companies need capital to grow or they need to buy out a partner. Some of those unique restructuring opportunities that the lender can not act out of the box, that’s where we’re fitting in,” he said.
Ghinos noted the company has the capacity to expand the platform as market conditions dictate, and it has been well received thus far. “We have a lot of leads, and a lot of interesting projects. It’s exciting because we’re filling in a niche in the market where nobody else is approaching it that way at this time,” he said.
Meanwhile, Shaner Hotel Group, which has some 42 hotels in its current portfolio, continues to actively expand its footprint. In 2013, the company opened two new properties, a Courtyard by Marriott in Greensboro, NY, and a Fairfield Inn & Suites in Towanda, PA, and co-acquired the Holiday Inn in Jacksonville, FL. Shaner manages all of these properties and has equity positions as well.
In addition, Ghinos said that the company currently has as many as seven projects under construction, five of which are select-service properties. Shaner has five Courtyard by Marriott flags under construction, three of which are in Florida, located in Madeira Beach, Delray and Marathon. The other two Courtyards are in Bridgeport, WV, and in Shippensburg, PA, located on the Shippensburg University Campus.
Ghinos noted that university hotels have become something of a specialty for the company, which is located near Penn State University, and already has five hotels in its portfolio in university towns and is looking to expand such projects. “Working in a college environment, we understand the dynamics and partnering with universities. That’s a special niche for us that’s growing,” he said.
Shaner is involved with two full-service projects under construction as well. The company, along with Prime Hospitality, has broken ground on a 154-room Playa Largo Resort & Spa in Key Largo, FL. The hotel, which will be part of Marriott’s Autograph Collection, is set to open in the summer of 2015 and represents the ninth hotel that Shaner and Prime have partnered on. Ghinos, who noted the Key Largo area hasn’t seen any new hotel development in some 25 years, added the property will closely reflect the local area.
“Our properties always pay homage to their surroundings so Playa Largo will combine the cozy comfort of The Keys with the feeling of luxurious international service and hospitality that Shaner and Prime are known for providing,” Ghinos stated.
In addition, the HARBORcenter Development, LLC, reached an agreement with Shaner Hotels and Marriott International to operate a hotel as part of a mixed-use project across the street from First Niagara Center. The 205-room Marriott Buffalo Harbor Center is expected to open in summer of 2015.
Lance Shaner, chairman of Shaner Companies, commented, “We’re very honored to increase our role in the Buffalo market. We view this project as a natural fit for our organization. We are very proud to be associated with it and very excited. We believe the performance of this beautiful facility will exceed all expectations.”