Fri, 02/11/2012 - 12:46
Strategic Hotels & Resorts has closed on a USD90.0 million non-recourse mortgage agreement with MetLife secured by the Hyatt Regency La Jolla hotel.
Under the terms of the agreement, the USD97.5 million mortgage previously encumbering the property will be replaced with a USD72.0 million A-Note and an USD18.0 million B-Note that will mature 1 November, 2017. The floating rate A-Note will bear interest at LIBOR plus 400 basis points, subject to a 50 basis point LIBOR floor, and the B-Note will bear interest at a fixed rate of 10.0 per cent. Excess cash flow generated from the property, after paying interest expense and an asset management fee earned by the Company as asset manager of the joint venture, will amortize the original principal of the B-Note. The A-Note is an interest only loan for its entire five-year term.
In addition to a USD7.5 million reduction in the principal amount of the loan, the joint venture contributed USD12.0 million to a capital reserve to fund capital improvements at the property, including a comprehensive renovation of the guest rooms, bathrooms and corridors. The Company, which owns 53.5 per cent of the joint venture, contributed USD10.8 million as its pro rata share of the total capital requirement.
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