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CLEARWATER, FL-The 110-room Best Western Sea Wake Beach Resort has received $21.1 million in first mortgage financing. The financing was arranged by Santa Monica, CA-based Vista Capital Co. on behalf of the borrower, which is a locally based private investor.
Vista Capital Co. principal Zak Selbert tells GlobeSt.com that the borrower acquired the property in 2005 with the intention of tearing it down and constructing a $100-million high-rise condominium tower in its place. Although the project was nearly ready to break ground--a construction loan was in place and deposits for the units had been taken, the borrower decided not to move forward with it due to the softening of the condominium market.
"[The borrower] wanted to put some long-term financing on the hotel so that it could continue to be operated as a hotel," Selbert says. "The long-term financing replaced the interim financing that had been used to acquire the property."
The 10-year, fixed-rate loan was provided by an affiliate of a Wall Street investment bank. The loan features interest-only payments for the first two years and was used to pay off a full recourse, floating-rate mortgage.
The financing provides the borrower with the flexibility to convert the hotel brand or build additional rooms while offering the benefits of long-term, fixed-rate financing. The property is a six-story hotel located on 500 feet of beachfront. Amenities include indoor and outdoor dining and meeting space and an outdoor beachfront pool.
Selbert adds that the transaction was a challenge because it was initiated in September at the height of the credit crunch. "We were able to structure and fund this transaction despite the exigent challenges, including the difficulty in obtaining hurricane insurance on the coast in Florida, the CMBS market standstill and new underwriting guidelines," he says.
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