Aries Secures $15.5 Million Non-Recourse CMBS Loan for Gulf Shores, AL HotelsJune 14, 2016
Executive Vice President Rushi Shah with the help of Prabhat Jayara, analyst at Aries Capital, have secured a non-recourse CMBS loan totaling $15.5 million on behalf of their client for the refinance of two limited service flagged hotels in Gulf Shores, Alabama.
Shah not only overcame the recent volatility of the CMBS markets to deliver a 10-year fixed rate permanent loan at a 60% LTV with a 25-year amortization and relatively low fixed rate, he also structured the loan to enable the borrower to take $8.5 million as cash out, which was above the properties’ total cost basis. The hotels are now well-positioned for long-term success and the borrower has ready funds to capitalize on growth opportunities in the next two years.
“Midway through the transaction, the credit markets’ risk appetite decreased due to elevated recessionary concerns. As the CMBS markets got choppier, cash out refinances for hotels got tougher,” said Shah. “We recognized these were good properties owned by a highly credit-worthy borrower and leveraged our deep knowledge of and proven track record in this coastal market, along with our strong relationship with the head of securitization at one of the largest conduit lenders in the world, to think outside of the box and successfully structure the loan. We worked diligently to make sure the borrower received the best possible capitalization, while also mitigating the lender’s risk. The result was a win-win for everyone.”
“Engaging Rushi and Prabhat to lead our financing search was absolutely the right decision,” said the borrower. “If it wasn’t for their creativity and financial acumen, we would have come up short. They deftly navigated the entire transaction process for us, continuously proving their talent and the validity of their lender relationships. We will definitely trust our future transactions to Rushi and Aries.”
Gulf Shores, Alabama is located between Mobile, Alabama and Pensacola, Florida on the shores of the Gulf of Mexico. The area’s large supply of undeveloped land and strategic location have fueled its population growth and development, even post the 2010 Deepwater Horizon Oil Spill. The disaster prompted over $230 million in tourism promotion grants, private and government contributions, settlements and massive cleanup programs in order to rebuild the community. The recipient of numerous recent travel awards and accolades, Gulf Shores has regained its status as a premier resort destination in the American South, with over 32 miles of beaches and a trove of outdoor recreation.