Apollo Commercial Real Estate Finance has closed a $20m mezzanine loan secured by the 488-room Los Angeles Marriott Burbank Airport hotel in Burbank, California.
The five-year, fixed rate mezzanine loan carries a 74% loan-to-value and was underwritten to generate an 11% IRR. It is part of a $90m financing that includes a $70m first mortgage from Deutsche Bank subsidiary German American Capital Corp.
New York-based AWH Partners and Starr Companies closed on the more than $100m acquisition of the hotel last month. The joint venture said it will complete the remainder of a $13.5m renovation of the hotel and its convention center, commenced by the previous owner and seller, Westbrook Partners. The firms will also explore potential additional development rights on the approximately 12-acre property.
AWH, which has made more than $575m in hotel investments since 2010, said it spent three years looking for the right opportunity to enter into the Los Angeles and Southern California market and that it continues to seek off-market (or narrowly marketed) value-add investment opportunities.
The property, at 2500 North Hollywood Way, consists of a nine-story West Tower and eight-story East Tower, with an adjacent conference center and nearly 50,000 sq ft of meeting space. It is next to the Burbank Bob Hope Airport and close to several production studios and entertainment headquarters, Universal Studios and downtown Los Angeles.
Spire Hospitality will operate the property under a franchise agreement with Marriott Hotels.