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Hotel Owner Refinances 29 Properties for $141M

SACRAMENTO-Tharaldson Lodging swaps out floating rate debt on properties in 14 states with cross-collateralized loans at a fixed rate in the mid 5% range.

By Brian K. Miller | Updated on April 10, 2005

SACRAMENTO-Tharaldson Lodging has switched 29 properties from floating rate debt to fixed rate debt in a package deal totaling $140.8 million. The properties include Marriott Courtyards, Residence Inns, Springhill Suites, Fairfield Inns, Hilton Homewood Inns, Hampton Inns, Choice Hotel Sleep Inns and Comfort Inns. Eleven of the properties are located in California.The lender is ING Life Insurance. The new cross-collateralized loans have 20-year terms that may be called in or pre-paid after 10 years. The interest rate is fixed in the mid 5% range. John Fett of GMAC Commercial Mortgage Corp. sourced the loan. Fett says Tharaldson was able to get a better rate because the company’s namesake personally guaranteed the debt. As for why he wanted to refinance in the first place, Fett says Tharaldson had watched the prime rate on which his loans were based rise from 2.5% to more than 5.5%. Fett says Tharaldson went with a life company rather than a conduit lender for flexibility. In 1998, Tharaldson did a $300-million conduit loan for a different portfolio of properties and has found it very difficult swap properties as issues arise. “With a conduit program, it takes an act of congress to get a property in or out,” Fett says. “It’s a much easier process with a life company.”With regard to the hotel market in general, Fett says the industry is coming out of a downturn that it began slipping into prior to the terrorist attacks in 2001. “The feeling now is we are coming out of that trough and that there is real upward momentum with hospitality properties,” he says. “As a result, for strong operators excellent financing is more available now than ever.”

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