HARRISBURG, PA-After a 90-day review process, Philadelphia-PA based Llenrock Advisors closed and placed $8.9 million in permanent financing for a select service 18-month-old Marriott hotel in the Greater Harrisburg market, Llenrock Founder and Managing Partner Andrew Benioff confirms.
Located just outside the state’s capital city, Benioff says the three-star, four-story hotel offers suites, meeting space and a sky lounge, which has seen much activity due to a recent spur in office development in the area. “Harrisburg itself is a tertiary market, although, in actuality, the hotel is performing extremely well,” Benioff tells GlobeSt.com, in an interview.
While many other firms have shied away from hotel financing—especially in the suburbs—Benioff says the hotel is immediately adjacent to two class A office buildings, and strong development is continuing to grow here, attracting new businesses and visitors to Central PA. “Today, permanent financing is somewhat difficult to come by because cash flows of many types of properties have been impacted by the recent downturn, especially hotels,” he says, explaining that permanent financing sources often seek out office and retail properties instead of the hospitality market.
In turn, Llenrock secured a 10-year fixed rate debt at a 6% interest rate from a European Investment Bank conduit lender for the hotel’s owner, who asked not to be identified. Benioff says given his client’s “stellar track record of hospitality ownership and management,” the lender went to 60% loan-to-value.
“We were able to convince one of the major European investment banks to take a look at this and provide very attractive fixed rate financing for it,” he says, describing that hotels are in an asset class which has been hard to finance even at 50% LTV. At the end of the 10-year period, the client would need to refinance. “Even for hotels, there are opportunities to refinance,” he says. “It’s a very positive side for the whole market.”
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