Mid-Atlantic Hotel Portfolio

$54,870,000 + $3,500,000 Mezz | MD – D.C. – DE

Background:

An owner/operator was under contract to acquire a Comfort Suites at BWI Airport and two Fairfield Inns and a Hampton in core locations near Washington DC. Sponsorship owned an under-leveraged Fairfield Inn in Wilmington, DE.

Challenges:

• A tight going-in cap rate required financial engineering to achieve desired equity returns.

• Tight closing timeframes required precise transaction coordination as Wilmington cash-out had to precede the acquisition closings.

• Sponsor was under-capitalized and inexperienced with CMBS financing.

Solution:

• CHC helped unlock sponsor equity in an existing asset – the Wilmington Fairfield Inn – to help sponsor raise capital to close the acquisitions.

• CHC sourced mezzanine capital at attractive rates to leverage up sponsor equity yields.

• CHC’s transaction team put on a full court press to close cash-out refinance in time for cash-out funds to be recycled to fund the acquisitions.

Outcome:

CHC executed transactions with three lenders – two mezzanine sources and a CMBS lender – at 80% loan-to-cost (including PIP).