Hotel REIT Reduces Interest Expense With $300M CMBS Loan

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ARLINGTON, VA-MeriStar Hospitality Corp. has refinanced an existing $300-million CMBS loan that was secured by 19 of its 71 properties. The new refinancing package, placed through Lehman Brothers, amounts to an aggregate $317 million and consists of a $312-million CMBS loan secured by 18 of the 19 properties involved in the original transaction. There is also a $15 million term loan collateralized by a single hotel.

MeriStar CFO Donald D. Olinger says the transaction “reduces our expected annualized interest expense by more than $9 million.” The transaction leaves the company with $45 million in cash presently held in escrow, and the opportunity to tap into cash flow from property operations in the future.