MCR and BLT secure $632m refinancing for US hotel portfolio amidst tough market conditions

MCR, together with Building and Land Technology (BLT), a leading real estate firm with over 25 million square feet of developed real estate, has successfully closed a significant refinancing deal worth $632 million on a portfolio of 53 hotels across the United States. This three-year, fixed-rate financing underscores the strong asset quality and operational performance of the properties involved, managed by MCR.

The refinancing comes at a time when debt markets are particularly challenging, making the successful closure of the deal a notable achievement in the real estate sector. Carl Kuehner, Chairman of BLT, highlighted the favorable conditions of the transaction, stating, “It is a great achievement to accomplish a refinancing of this size and scope in today’s challenging debt environment. Pricing on the bonds was strong with our AAA’s coming in at +145. This deal is a great outcome for our partnership.”

The portfolio, acquired by MCR and BLT between 2013 and 2015, includes 5,958 guestrooms spread across 14 states with a strong presence in high-growth markets such as Texas, Arizona, Virginia, and North Carolina. The hotels represent a mix of eight Marriott and Hilton extended stay and select service brands, including well-known names such as Residence Inn by Marriott, Courtyard by Marriott, TownePlace Suites by Marriott, Hilton Garden Inn, and Hampton Inn by Hilton.

The financing deal was structured as a single asset, single borrower (SASB) Commercial Mortgage-Backed Securities (CMBS) transaction, valuing the portfolio at $960 million. Under the management of MCR’s in-house team, which includes 7,000 professionals across 150 hotels, the portfolio has shown impressive financial growth. At the time of closing, the portfolio reported over $64 million in net operating income (NOI) on a trailing 12-month basis, an increase from $55 million in 2021. Since their acquisition, over $118 million has been invested in the properties for enhancements and maintenance.

The transaction was managed and bookrun by Citigroup Global Markets, with Eastdil Secured LLC acting as the exclusive advisor to MCR and BLT. Legal advisement was provided by Fried, Frank, Harris, Shriver & Jacobson LLP.

The refinancing deal not only reflects the robust performance and strategic management of the MCR and BLT hospitality portfolio but also illustrates the resilience of the commercial real estate sector, particularly in hospitality, amidst economic uncertainties. The strong pricing of the bonds and the substantial capital reinvestment into the property portfolio demonstrate a proactive approach to property management and financial structuring that could serve as a model for similar deals in the industry.

This transaction not only strengthens the financial footing of the involved properties but also sets a precedent for navigating refinancing in a tight credit market, showcasing the enduring value and appeal of well-managed real estate investments in the hospitality sector.