CSV Acquires $214M Loan on Hotel Portfolio

NEW YORK CITY-The Carlton Group Ltd.’s chairman Howard Michaels revealed that Carlton Strategic Ventures, the principal investment and merchant banking group of the Carlton Group, has acquired a $214-million participation in the M7 mezzanine loan tranche on the Extended Stay Hotels portfolio. The M7 loan tranche is a senior mezzanine level tranche with more than $1 billion of subordinate debt and borrower equity.

The M7 mezzanine loan is part of a $7.4-billion financing provided by Wachovia Bank, Bank of America, Merrill Lynch, and Bear Stearns to fund the acquisition of Extended Stay Hotels Inc. by the Lightstone Group in June 2007. The primary collateral underlying the loan is a portfolio of 664 extended stay hotel properties, as well as a pledge of all cash flow from 17 ground leased properties, which comprise approximately 75,683 hotel rooms in the US and Canada.

Michaels tells GlobeSt.com that “certain sellers are getting more realistic about pricing. Also, aside from the obvious credit issues, the recent increase in Libor is causing a lot more stress,” he says. “We are not afraid of the real estate so we price the loan as if we ultimately had to take over the collateral.”