Fund Managers

Lenders to securitize Blackstone's $570m hotel debt

$570 million of bank debt provided against a 47-hotel portfolio will be securitized.

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The lenders on Blackstone’s recent $800 million acquisition of a 47-hotel portfolio from Clarion Partners will securitize the $570 million senior loan on the deal, a source familiar with the deal told PDI sister publication Real Estate Capital.

JPMorgan Chase Bank and Deutsche Bank will securitize the five-year, floating rate debt into a single-borrower securitization in the coming weeks. The banks – with JP Morgan as the lead lender – also provided $105 million mezzanine loan to New York-headquartered Blackstone, for a total $675 million of debt on the portfolio acquisition.

The Clarion portfolio consists of 47 extended-stay Hilton and Marriot-branded hotels with 5,908 rooms across 18 states. About half the value is located on the west coast of the country – mainly in California, Oregon and Washington – and roughly 80 percent of the hotels fall within a top 20 metropolitan statistical area, the source said.

This wouldn’t be the first time JP Morgan has securitized the debt on a Blackstone deal. In July, the JPM 2014-bxh securitization bundled together two floating rate mortgage loans tied to Blackstone’s acquisitions of the OTO Development portfolio and the Four Seasons Las Colinas.

The OTO Portfolio mortgage loan is backed by 16 OTO hotels located throughout the United States totaling 2,031 rooms; and The Four Seasons Las Colinas loan is backed by the 431-room luxury resort, spa, and golf club located in Irving, Texas.

New York-based private equity giant Blackstone has aggressively beefed up its hotel portfolio over the last two years, building its portfolio to roughly 160 hotels with a $3.5 billion aggregate value.

Among other major acquisitions, in 2012 a Blackstone affiliate bought the Motel 6 and Studio 6 budget chains for $1.9 billion. In May of 2013, the firm paid $1.3bn for Apple REIT Six, a hotel REIT, and in September a Blackstone affiliate agreed to buy 16 hotels from hotel REIT Hersha Hospitality Trust for $217 million. Most recently, the firm reportedly agreed this month to purchase The Westin Harbour Island hotel in Tampa, Florida, along with its Jackson’s Bistro, for $46.5 million.