DiamondRock Hospitality Company has entered into a USD86 million mortgage loan secured by the Courtyard New York Manhattan/Midtown East.
The new loan matures in 2024 and bears interest at a fixed rate of 4.40 per cent. It is interest-only for the first two years after which principal will amortise over 30 years.
The hotel was previously encumbered by a USD41.3 million mortgage loan bearing interest at 8.81 per cent.
"We are pleased to take advantage of the current low interest rate environment by locking into a 4.40 per cent interest rate for 10 years. Further, loan proceeds are approximately 10 per cent higher than our total investment in the hotel and the loan will achieve our strategic objective of further laddering our debt maturities," says Sean Mahoney, executive vice president and chief financial officer of the company.
The company used proceeds from the new loan to fully repay the USD41.3 million outstanding on the existing mortgage loan. The remaining excess proceeds will be used to build capacity for future opportunistic investments. After the completion of this loan, 11 of the company's 25 hotels remain unencumbered by property-specific mortgage debt. The refinancing lowered the company's weighted average interest rate by approximately 20 basis points to 4.98 per cent.