LOS ANGELES—Illustrating the complete return of the hotel sector, Karlin Real Estate has given $96 million in first mortgage debt to refinance three hotel properties in Arizona and Colorado. The funds were secured by two borrowers in two separate transactions.

“New lenders, such as Karlin Real Estate, are seeking to grow and the continuing recovery of the hospitality sector presents attractive financing opportunities,” Larry Grantham, managing director of Karlin Real Estate, tells GlobeSt.com. “The hospitality recovery is nationwide including secondary locations. Hospitality financing opportunities will increase as more hotels seek to grow revenue and NOI, which in many cases require additional capital for expansions and property.”

The properties include L'Auberge and Orchards Inn, two adjacent hotel properties in Sedona, AZ. IMH Financial Corporation secured $50 million for the Arizona properties, with plans to use the funds to pay off the existing debt and fund various capital improvements. Sitting on 4 acres, the L'Auberge is a AAA, four diamond luxury inn and spa with 18,000-square-feet of indoor and outdoor meeting space. The adjacent Orchards Inn is a 70-room hotel with a 146-seat restaurant. The funds allocated toward the Orchards Inn will be used to renovate the restaurant.

The Historic Stanley Hotel, 149-room resort in Estes Park, CO, is the remaining hotel to receive funding. The Grand Heritage Hotel Group secured $46 million to refinance the existing debt on the property. Karlin provided a five-year interest-only loan with a delayed draw component. The funds from the delayed draw will be used to fund the completion of a 50,000-square-foot, 50-room luxury brand adjacent to the hotel. The structure will be named Aspire Hotels and Resorts, a new hotel brand.

“Both loans require additional funding post close,” explains Grantham. “Karlin was able to understand the value creation from the delayed draw funding and structure a transaction which worked for both parties. In addition to the delayed draw funding, these hotels are not located in 'core' markets.  We were able to overcome this challenge given the property cash flows, solid ownership and hotel management teams.”

This hotel lending activity nicely illustrates the “View from the Boardroom” panel discussion at the recent ALIS conference in January, where top hotel executives said that they expect 2015 to be a very healthy and strong year.