JLL Advises Starwood on Financing of Extended-Stay Hotel Portfolio

By Gail Kalinoski, Contributing Editor

Dustin Stolly, JLL

Starwood Capital Group has refinanced the InTown Suites Portfolio, a national extended-stay hotel chain, for $500 million nearly two years after acquiring it for $735 million, including $609 of existing mortgage debt.

JLL’s Hotels & Hospitality Group secured the loan for the Greenwich, Conn.-based private investment firm that focuses on real estate and hospitality. Credit Suisse provided the five-year, floating-rate loan.

Managing Director Dustin Stolly, Executive Vice President Bill Grice and Senior Vice President Brett Rosenberg led the JLL team on the transaction.

“The portfolio has a proven track record of strong performance and lenders were drawn to the opportunity to back a diversified portfolio of hotels across a wide range of markets,” Stolly said in a news release. “Additionally, the portfolio benefits from its strong brand affiliation and institutional sponsorship.”

Starwood Capital closed on the InTown Suites purchase in July 2013, acquiring it from Kimco Realty, the largest owner and operator of neighborhood and community shopping centers in North America and a majority partner in the hotel chain’s joint venture. It was the last of the large non-retail assets that Kimco owned at the time.

The portfolio currently totals 85 properties and 10,764 keys across 18 states. The hotels are located in 13 markets including Dallas, Houston, San Antonio, Cincinnati, Indianapolis, Nashville, Salt Lake City and Phoenix. Suites feature full kitchens and large living room areas along with high speed Wi-Fi Internet.

“InTown Suites is widely recognized as a leader in the economy extended-stay lodging segment,” Grice said in the release. “The portfolio’s strong occupancy combined with improving revenue momentum, evidenced by its net operating income increase of more than 54 percent since 2009, made this an extremely attractive refinancing opportunity.”

Rosenberg said she expected the chain’s finances to continue improving.

“With key value initiatives under way, the portfolio is poised to drive significant bottom line net operating income gains as the properties demonstrate a highly efficient operating model with robust profit margins,” Rosenberg added.

In July, Jonathan Pertchik was named CEO of InTown Suites. A month later, the company announced it had purchased four properties in the Hamptons Roads region of Virginia for $17 million. Pertchik said in a statement at the time that management was making improvements to its hotels across the country.

Meanwhile, Starwood Capital recently added to its extended-stay holdings but this time the assets were located outside the United States. The firm said in January that it had acquired a portfolio of four extended-stay hotels and a residential complex in two of London’s top emerging submarkets, Tower Bridge/Bermondsey and Earls Court/Kensington, for $312 million.