Latest HITs: New financing for Raleigh; Pebblebrook earnings; Outrigger deal done

Raleigh loan. Developers of the Raleigh hotel in Miami Beach have finalized a $190 million loan from BH3 Management’s Debt Opportunity Fund II to continue redevelopment of the historic property. Michael Shvo, Deutsche Finance America, and German Institutional pension funds have since last year started work to restore the hotel with 60 suites and add a 42-unit condo tower. The property expected to reopen in 2026 will be managed by Rosewood Hotels & Resorts. The mortgage replaces $146.8 million in debt, according to a spokesperson for the lender. With a total investment of approximately $1 billion, including a substantial equity contribution of over $300 million, the restoration and expansion represents one of the single largest investments in Miami Beach.

Pebblebrook beat. Pebblebrook Hotel Trust beat the Street with 2Q23 earnings that showed same-property revenue growth of +0.7% and lower expenses and more business interruption income than previously estimated. Adjusted EBITDA of $116.2 million beat $111 million estimates. RevPAR was flat with ADR coming in at -4.5% and occupancy +4.6%. Leadership commentary was in line with other public hotel companies, suggesting fundamentals remain strong. They also noted that more dispositions are being pursued in markets such as Chicago, Los Angeles, San Francisco and Washington, D.C.

MCR grows in Arizona. MCR, New York City, has acquired two hotels in Phoenix, Arizona. The 169-room Holiday Inn Express & Suites Scottsdale – Old Town and the 121-room Hampton Inn by Hilton Phoenix-Biltmore gives MCR nine hotels in Arizona. Prices paid and names of the sellers were not disclosed.

Strong signal about rebound. STR has reported that as July 15, 2023, 90% of global markets are showing growth in RevPAR compared to 2019. This marks the highest proportion of markets in that category since the update began in May 2022. China played a significant role in that growth with 85% of its markets surpassing 2019 RevPAR levels. At one point last year, China accounted for one-fourth of the markets with RevPAR levels below those of 2019. Among all countries with a total supply of more than 50,000 rooms, Israel, Switzerland, Greece, Italy, and France led in RevPAR on an actual basis. Notably, all five countries were leaders in the last 28-day period, but this time around, Greece grabbed the top spot from Israel. Since the last update, country-level performance has remained stable, with all 48 countries in the 50,000-room group reporting occupancy rates above 50%. Ireland continued to lead in occupancy at an impressive 88%. Additionally, as the northern hemisphere moves deeper into summer, ADR has been on the rise with nine countries reporting ADR above US$250.

Braintree adds 330 rooms. Braintree Group, Boise, Idaho has acquired three properties, adding 330 rooms to their portfolio. The group’s Resolute Road Hospitality will manage all three assets. The properties include the Courtyard by Marriott Lehi at Thanksgiving Point and the SpringHill Suites by Marriott Lehi at Thanksgiving Point, both in Lehi, Utah, and the Hilton Garden Inn Las Vegas/Henderson, in Henderson, Nevada. Braintree plans to launch a substantial renovation to the SpringHill Suites by Marriott and a property refresh of the Courtyard by Marriott at the end of 2024. The scope of work for these projects will focus on elevating the guestrooms and a refresh of the hotel’s public areas.

Elise Capital adds asset. Elise Capital, an Atlanta-based hotel real estate investment firm, has acquired the 67-room Holiday Inn Express & Suites Picayune-Stennis Space Center, Picayune, Mississippi in an off-market transaction from an independent seller for $7.5 million. Synergy Hospitality Group will manage the property.

Crescent grows management. Crescent Hotels & Resort has added the 198-key Embassy Suites by Hilton Washington D.C. Chevy Chase Pavilion to its management portfolio.

Braemar financing. Braemar Hotels & Resorts, Dallas, has entered into a $200 million corporate financing vehicle with an initial three-year term and includes a senior secured term loan facility in an initial principal amount of $150 million and a senior secured revolving credit facility in an initial principal amount of $50 million. The financing includes the opportunity to expand the borrowing capacity up to an aggregate size of $400 million, and there is a one-year extension option subject to the satisfaction of certain conditions. The financing is fully prepayable without penalty, and the interest rate is based upon a pricing grid related to the company's Net Debt to EBITDA that provides for a range of SOFR + 2.35% to 3.10%. Braemar anticipates that the initial interest rate will be SOFR + 2.85%. The use of proceeds for the financing was to repay the mortgage debt associated with the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa, and the Hotel Yountville, which will serve as the borrowing base for the financing.

TPG growth. TPG Hotels & Resorts, Providence, Rhode Island, will manage The Blennerhassett Hotel, Parkersburg, West Virginia. The 140-year-old, 84-room historic property was purchased in 2019 by R&W Hotels, which is owned and operated by local Parkersburg businessmen Wayne Waldeck and Lee Eric Rector.

Outrigger finalizes Maui deal. Outrigger Resorts & Hotels has finalized the acquisition of the Kā‘anapali Beach Hotel in Maui, Hawaii and the 432-room hotel will become the Outrigger Kā‘anapali Beach Resort. The deal was first announced in May with no purchase price or name of the seller disclosed. Additionally, as part of the same transaction, Outrigger took ownership of The Plantation Inn, an 18-room, adults-only bed and breakfast in historic Lahaina Town. In the last two years, Outrigger has added five beach resorts to its portfolio, including Outrigger Kona Resort & Spa on Hawai‘i Island, as well as three properties in Southern Thailand and a luxury resort in the Maldives.

Wynn settlement. Las Vegas legend Steve Wynn has agreed to pay a $10 million fine and cut ties with the casino business, ending a lengthy legal battle with Nevada gaming regulators over claims of workplace sexual misconduct. Wynn resigned from his namesake gaming company in February 2018 over these allegations. Wynn signed a seven-page document on July 17 acknowledging he had been accused of “failure to exercise discretion and sound judgment” to prevent actions that “reflected negatively on the reputation” of Nevada and its gambling industry. Now 81, he lives in Florida and via a statement said he “looks forward to moving on to other phases of his life.” The fine is reportedly the largest ever imposed by the commission, second only to a $20 million fine in 2018 to Wynn Resorts for failing to investigate the sexual misconduct claims made against Wynn.

Nero's Theatre under Four Seasons. Archaeologits have discovered the ruins of Nero’s Theatre under the garden of what will become a Four Seasons hotel near the Vatican in Rome. Archaeologists have excavated deep under the walled garden of the Palazzo della Rovere since 2020 as part of planned renovations on the frescoed Renaissance building. The palazzo, which takes up a city block along the broad Via della Conciliazione leading to St. Peter's Square, is home to an ancient Vatican chivalric order that leases the space to a hotel to raise money for Christians in the Holy Land. The hotel is expected to be open in time for the Vatican's 2025 Jubilee, when an estimated 30 million people and pilgrims are expected to flock to Rome. Among the discoveries: 10th century glass-colored goblets and pottery pieces that are unusual because so little is known about this 15th century period in Rome. Officials said the portable antiquities would be moved to a museum, while the ruins of the theater structure itself would be covered again after all studies are completed.

Six Japan hotel trades. Tokyo-based Hospitality and Residential REIT Invincible Investment Corp. has acquired six hotels there from U.S. Asset Manager Fortress Investment Group for JPY 57.2 billion. The deal includes properties in Okinawa, Nagano, Okayama, Aomori, Chiba, and Akita. The portfolio acquisition will bring Invincibles’ assets under management to JPY 548.6 billion with 92 hotels valued at JPY 507.8 billion.

Malaysia development. Malaysia-based Highlands Parkcity Sdn Bhd, in partnership with Malaysia-based Yuk Tung Group and the Association for the Promotion of Higher Education in Malaysia, will develop Genting Highlands’ first CBD and integrated entertainment hub – King’s Park. With a gross development value of $2.1 billion, King’s Park will span over 61 hectares of freehold land and will take place over five phases. The first phase is expected to be completed by 2026 and will feature a commercial center and pedestrian street shops. Other phases will feature the construction of hotels with serviced apartments, two internationally branded theme parks, a halal dining hub, and a Syariah compliant hotel with housing units. To date, it has been confirmed that Swissôtel will operate a hotel in late-2028. The final phase of the project to be completed in 8 to 10 years will include a wellness and medical center.

Banyan Tree appointment. Determined to extend its expansion efforts into the U.S., Caribbean and Latin America, Banyan Tree Group in Miami has named Tom Riley senior executive director, Acquisitions and Development. He has held leadership roles at Marriott International, Hilton, Remington Hotels and Kimpton Hotels and Restaurants. He played a pivotal role in expanding Kimpton's portfolio throughout the Eastern United States, Caribbean and Latin America.