Driftwood refinances Sheraton in Park City, Utah

PARK CITY, Utah – Driftwood Capital has secured $33 million in refinancing for the 200-room Sheraton Park City hotel in Park City, Utah. Berkadia arranged the 5-year, fixed-rate CMBS loan through Goldman Sachs Bank USA.

This marks the second refinancing the Driftwood, Berkadia, and Goldman Sachs USA teams have accomplished together this year, following a $60.5 million refinance of Driftwood’s Margaritaville Lake of the Ozarks asset in January.

Hotel Investment Today is profiling Miami-based Driftwood Capital this week, focusing on their various strategies to manage through tumultuous times for development, M&A and financing. Click here to read Part 1 of the two-part feature.

Park City has emerged as a global destination, supported by numerous demand generators that bolster robust hospitality fundamentals, particularly for upper upscale properties like the Sheraton Park City hotel. The city’s formidable barriers to entry make it exceptionally challenging for new supply to enter the market, likely providing downside protection.

David Steiner

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The closing comes on the heels of Driftwood’s recent announcement that its hotel development pipeline has exceeded $1 billion in projected value. Driftwood’s development portfolio includes $800 million projects either under construction or scheduled to break ground in 2024.

“Driftwood Capital and its affiliates are thrilled to unlock value for investors through a new mortgage, which will replace existing debt with favorable terms,” explained David Steiner, managing director of Capital Markets at Driftwood Capital. “Park City has emerged as a global destination, supported by numerous demand generators that bolster robust hospitality fundamentals, particularly for upper upscale properties like the Sheraton Park City hotel. The city’s formidable barriers to entry make it exceptionally challenging for new supply to enter the market, likely providing downside protection.”

Driftwood repositioned the Sheraton Park City following its 2017 acquisition, which resulted in substantial increases in the property's NOI and RevPAR, according to Berkadia's Scott Walder, who worked on the refi with his colleagues.

Yes, this property fits Driftwood’s criteria for high-barrier-to-entry markets with continuing growth potential. This hotel has extensive meeting space compared to its nearby competitors, along with its close proximity to the mountains and historic main street, positioned to exceed expectations.

“The group segment remains the fastest-growing demand sector in hospitality, and the hotel is primed to leverage its over 12,000 square feet of dedicated meeting space. Moreover, travelers continue to show a strong desire for leisure and outdoor activities, particularly in distinctive markets offering top-notch features and amenities. This aligns with the trend of experiential travel, especially in destinations that provide a mix of indoor and outdoor experiences,” said Carlos Rodriguez, Jr., president and COO of Driftwood Capital.

Driftwood leadership said it will continue to be picky about further acquisitions with Chairman and CEO Carlos Rodriguez, Sr. stating that the company is starting to look at portfolio deals as the M&A market starts to improve. “And I don't care if it’s the tertiary market as long as there’s a strong market that has growth,” he said.

Rodriguez Sr. also said Driftwood has one deal in North Carolina that will be announced in early May and is working on “quite larger” deals to be announced in the summer.