Deutsche Bank has refinanced the Ritz-Carlton Half Moon Bay in Half Moon Bay, California with a $115m mortgage loan and served as co-lead arranger of a $750m unsecured credit facility provided to the borrower, Strategic Hotels & Resorts.
The five-year Half Moon Bay loan bears interest at a floating rate of LIBOR plus 240 basis points and has two one-year extension options.
The $750m unsecured credit facility features an accordion feature allowing for additional borrowing capacity up to $1bn. Comprised of a $450m unsecured revolving credit facility and a $300m unsecured term loan, the facility replaces a $300m stock-secured revolving credit facility. Initial pricing will be LIBOR plus 165bps and LIBOR plus 160bps, respectively.
“We proactively took advantage of the favorable capital markets to further transform our balance sheet, resulting in significant flexibility with nine unencumbered assets,” said Diane Morefield, CFO of Strategic Hotels & Resorts. “In addition, we have lowered our overall cost of debt and extended our maturity profile, with our next debt maturity not occurring until 2018.”
Deutsche Bank Securities was a co-lead arranger of the $750m facility with JP Morgan Securities and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Deutsche Bank also provided the original $75m acquisition loan on the Half Moon Bay property in June of 2004, when borrower/owner Strategic Hotels & Resorts paid $124.4m for the asset, data from Real Capital Analytics shows.
The global investment bank more recently refinanced the property in July of 2011 with a loan (of an undisclosed amount) that took out a $51.5m securitized loan — part of the Credit Suisse First Boston 2007-TFL2 CMBS deal — from 2005. The CSFB 2007-TFL2 loan had refinanced a previous securitized loan on the property.
Strategic Hotels & Resorts has been bullish on California hotels. In January the hotel group acquired the 250-room Montage Laguna Beach hotel, assuming a $150m mortgage loan from Mass Mutual Life.
Last June the firm acquired Blackstone’s stake in the luxury Hotel del Coronado near San Diego, and it also counts the Ritz-Carlton Half Moon Bay (in Half Moon Bay, California) among its holdings. Strong hotel fundamentals have backed the firm’s push into the resort space.
Strategic noted that the financing activity is expected to “reduce the company’s interest expense by approximately $6.4m for the remaining six months of 2015, lower its overall weighted average cost of debt to 3.2 percent and increase the company’s weighted average maturity to nearly five years.”