By Jon Peterson
Beverly Hills, Calif.-based Sonnenblick-Eichner Company has attracted $65.2 million of debt financing for two extended stay hotels in the Seattle market. The properties involved are the 149-room Hyatt House Seattle/Redmond and the 160-room Hyatt House Seattle/Bellevue.
Both of these properties are owned by LodgeWorks, a Wichita, Kansas-based hotel investment development company. This company stated in an e-mail that it sees the potential and likes the fundamentals of the greater Seattle hotel market. It will be considering future hotel development opportunities in the area.
The debt arranged by Sonnenblick-Eichner was done on behalf of AIG Insurance Company. The loans are non-recourse 10-year fixed rate debt. The debt is being used to re-finance both properties.
The interest rate on the loans is in the low four percent range with interest-only payments for the first five years of the loan. The loans on each property were not cross-collateralized.
“Seattle is a very strong hotel market, especially for the extended-stay segment of the hotel market. The region continues to show strong employment growth. Much of this is led by the major technology companies like Amazon and Microsoft,” says Elliot Eichner, a principal with Sonnenblick-Eichner.
There was a good amount of interest from lenders for these hotels. “We have tremendous lender interest in these transactions from both Wall Street investment banks and life insurance companies. The borrower chose a life insurance company execution giving them the ability to lock the rate at application while having the benefits of a portfolio lender,” said Eichner.
There was an issue with the previous loan on the two properties. “The borrower financed prior to their current loan maturity incurring a prepayment cost. The fixed-rate low interest rate loan we arranged more than offset the cost of the prepayment fee over the life of the loan,” said Patrick Brown, a principal with Sonnenblick-Eichner.
The two properties in Seattle have been in the market for a long time. The Hyatt House Bellevue opened for business in 2008. The Hyatt House Redmond started its operation one year later.
LodgeWorks is a hotel development and management company. It creates new projects with hotel companies like Hyatt, Hilton and Starwood.
Besides its projects in Seattle, it has also done developments in markets like Napa, Calif., Austin, Philadelphia, New York, Brooklyn and Salt Lake City.