Aries Conlon Capital Closes $22 Million in Hotel Loans in OR, CT and ALMarch 6, 2018
Aries Conlon Capital is pleased to announce that the national commercial real estate mortgage and investment banking firm has closed on a $5.7 million permanent loan at a below-market 4.3% interest rate for a Holiday Inn Express in Ontario, Oregon; a $7.5 million, interest-only bridge loan for the leasehold portion of the Radisson Hotel Cromwell in Cromwell, Connecticut; and an $8.8 million, non-recourse, CMBS permanent loan for a Hampton Inn in Gulf Shores, Alabama. The loans were originated and placed by Aries Conlon Capital’s Principal and CEO Rushi Shah and Senior Associate Suraj Desai, on behalf of three separate borrowers. Associate Vice President Prabhat Jayara and Vice President Heather Madsen managed the underwriting and closings.
In the first transaction, Desai secured a $5,700,000, 10-year fixed rate loan with cash out at a low 4.3% interest rate for a Holiday Inn Express in Ontario, Oregon. The 96-key hotel is located in between Portland and Salt Lake City, Utah. Placed through Desai and the firm’s relationship with a local credit union on behalf of the repeat client, in addition to the better-than-market rate, the recourse loan has no pre-payment penalties.
“Although we are entering a climate of rising interest rates, there are still active capital sources that continue to offer highly-competitive pricing at a minimal debt service ratio,” said Desai. “Our borrower is well-positioned for the future. He has locked in 10-year funding at 20 basis points under the Wall Street Journal Prime Rate, maintains the flexibility to sell or refinance his property even at year one, and now has cash available to invest as opportunities arise.”
“Aries Conlon Capital did a great job. They promised and delivered,” said borrower Jay Nijjer, CEO of TNB Hotels.
The Radisson Hotel Cromwell refinance launches the second phase of a larger portfolio financing strategy. Located just outside Hartford, Connecticut, the 215-key hotel was part of a previously-closed, seven-property ground lease portfolio financing executed by Shah and his client Inner Circle Investments, a sophisticated hotel group based in Daytona Beach, FL. In the previous transaction, instead of refinancing the hospitality assets as fee-simple properties, Inner Circle split ownership of the land parcels and the hotels into leased-fee and leasehold entities respectively, entered into 99-year leases with its hotels as tenants, and then refinanced the land/leased-fee portions at a higher loan-to-value ratio and more attractive terms.
“Separating the land from the hotels afforded the borrower significant financial benefits,” said Shah. “For example, because the land is not subject to the same depreciation as the hotels, the borrower may reap significant tax benefits. Also, the borrower was able to secure more attractive 10-year financing on the leased-fee portions at a much higher leverage, effectively lowering his overall debt service compared to a traditional fee-simple transaction.”
In the Hampton Inn transaction, Shah closed the 10-year fixed-rate loan at a 70% loan-to-value (LTV) ratio with 30-year amortization for repeat client A&R Hospitality. Shah successfully secured the financing despite the newly-opened hotel’s limited operating history, and enabled the borrower to recapitalize the property post construction. The 89-key, limited-services hotel is convenient to area airports, golf courses, water parks and award-winning public beaches.
“I value Rushi Shah’s in-depth knowledge of the financing market. He has always been able to quickly and efficiently close on our loans,” said borrower Ken Patel, CEO of A&R Hospitality. “I would wholeheartedly recommend him to other hotel owners and look forward to working with him and his firm again.”