(To read more on the debt and equity markets, click here.)
MCLEAN, VA-JER Partners' Longhouse Hospitality group has refinanced a 42-hotel portfolio located across six states in a $264-million transaction. The company owns and manages more than 40 extended stay hotels, including Sun Suite Hotels and Crestwood Suite Hotels.
The group has used part of the proceeds to refinance and defease their existing debt. Working capital has been set aside for additional acquisitions, according to Kevin O'Shea, a real estate partner in the New York City office of Allen & Overy, which advised Longhouse. This portfolio, which includes hotels in Florida, Texas, North Carolina, Louisiana, Mississippi and Georgia, was originally financed in two securitized financings: a CSFB deal in August 2005 and a Bear Stearns transaction in 2001.
The portfolio's performance exceeded expectations, O'Shea says, which was one of the reasons behind the refinancing. "Four of the hotels were in the Gulf region and they were positively impacted by Hurricane Katrina." These hotels, two in the New Orleans-area and two in Mississippi, had been damaged, he explains, but the company dispatched contractors to the area and repairs were made relatively quickly.
Once operational, occupancy skyrocketed due to the need for temporary housing by local people as well as contractors and federal agencies working on the relief efforts. "The strong performance of the portfolio created a highly successful refinancing opportunity for the company," O'Shea says. The transaction closed on May 4.
Additional acquisitions are likely to be in the same general geographic area in which the company is already active. According to O'Shea, Longhouse acquired a hotel in Newport News a few days before the refinancing closed. In related news, JER Partners has appointed Mark S. Weiss president of JER Investors Trust Inc. and a managing director of JE Robert Co. Inc. Weiss previously worked for more than 16 years at Goldman Sachs Group, Inc., most recently as a managing director for commercial and residential mortgage originations and securitizations.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
