HFF Secures $581M Refi for 16-Property Blackstone Hotel Portfolio

By Gail Kalinoski, Contributing Editor

The Blackstone Group has refinanced a 16-property, 4,798-room hotel portfolio and golf course/tennis club with a $581 million loan obtained from GE Capital Real Estate.

The properties were acquired in 2006 when Blackstone, a New York private equity real estate investment company, bought MeriStar Hospitality Corp., a former Bethesda, Md.,-based hotel REIT, for $2.6 billion. The merger of MeriStar, which at the time owned 57 hotels in major markets and resort locations, and affiliates of Blackstone was completed in May 2006. Earlier in the year, Blackstone had acquired 10 of MeriStar’s Florida assets for $367 million.

A team from HFF, led by senior managing directors Trey Morsbach and Dan Peek and managing director John Bourret, secured the three-year, floating rate loan that has two one-year options. Bourret told Commercial Property Executive the key to the loan was “a high level of prepayment flexibility.”

“There was a lot of flexibility with the loan. That’s pretty unique to GE,” he said.

Bourret said the deal was a refinance of their acquisition loan from 2006.

“The hotels have very strong fundamentals and with the low interest-rate environment, it was just a prime time for Blackstone to refinance and continue operating the properties until they decide to exit,” he told CPE. “All of the properties have seen pretty substantial ramp ups over the last 12 to 18 months coming out of the downturn. The timing was right to execute this plan.”

The portfolio is comprised of 12 full-service hotels, four boutique hotels known as The Inns of Sanibel in Sanibel Island, Fla., and The Dunes Golf and Tennis Club in Sanibel Island. The full-service hotels are: Sheraton San Francisco Fisherman’s Wharf in San Francisco; Hilton Irvine-Orange County Airport and Marriott Irvine, both in Irvine, Calif.; Doubletree Austin in Austin, Texas; Doubletree Suites Indianapolis-Carmel in Carmel, Ind.; Hilton Clearwater Beach Resort in Clearwater, Fla.; South Seas Island Resort in Captiva Island, Fla.; DoubleTree Orlando-Universal in Orlando, Fla.; Hilton Cocoa Beach Oceanfront in Cocoa Beach, Fla.; Hilton Key Largo Beach Resort in Key Largo, Fla.; The Ritz-Carlton Pentagon City in Arlington, Va.; and the Marriott Princeton-Forrestal in Princeton, N.J.

Blackstone continues to be very active in the hotel sector, including the acquisition announced this week of a 751-room, four-property Hilton Select Service portfolio from Sage Hospitality and Apollo Global Management. The sales price wasn’t released but the portfolio includes three Hilton Garden Inns located in Atlanta, Denver and Orlando, Fla., and a Homewood Suites in San Francisco. In April, Blackstone said it agreed to purchase the leasehold interest in the 1,230-room Hyatt Regency Waikiki Beach Resort and Spa in Honolulu for $450 million from a joint venture of Goldman Sachs’ Whitehall Street Real Estate Investment Fund and Hyatt Hotels Corp.

HFF has arranged financing for several high-profile hotels this spring, including securing a $230 million loan package for The Breakers Resort in Denver on behalf of The Bascom Group L.L.C That deal comprised a $165 million first mortgage from Bank of America and CIBC, a $26.25 million mezzanine loan and $38.75 million of preferred equity from Prudential Real Estate Investors’ U.S. Real Estate Debt Fund.