Sunstone Hotel Reworks $270M Loan Plus Sells $90M Note - Citybizlist Real Estate
Posted October 10, 2011
NEW YORK - Setting itself up for the near term, Sunstone Hotel Investors Inc. has refinanced the $270 million loan secured by the 460-key Doubletree Guest Suites Times Square in the Broadway Theater District. A second deal brought the sale of a $90 million note related to this year's trade of a Miami property.
Sunstone secured a $180 million non-recourse loan with a seven-year term and interest-only payments for the first 24 months. The floating interest rate is based on the three-month LIBOR plus 325 basis points. The Aliso Viejo, Calif.-based Sunstone used about $90 million of its unrestricted cash to repay the prior loan.
The 45-story Doubletree Times Square, located at 1568 Broadway, boasts a new lobby, restaurant, lounge and fitness center. It also features 8,000 square feet of event space.
In a second transaction, Sunstone sold the first mortgage note held in conjunction with the trade of the 133-suite Royal Palm hotel at 1545 Collins Ave. in downtown Miami. The $90 million note was sold at a 12 percent discount to face value, resulting in net proceeds of about $79.2 million, according to a press release.
Sunstone has retained an earn-out right on the Royal Palm, entitling the seller to an additional $20 million if certain hurdles are met. The note carries a variable interest rate of LIBOR plus 500 basis points and is subject to a 1 percent floor. The note matures in December 2013.
"Given the challenging market conditions, Bryan Giglia, our senior vice president of corporate finance and Robert Springer, our senior vice president of acquisitions, were both outstanding as quarterbacks of these two deals," stressed Ken Cruse, Sunstone's president and CEO. "The two transactions announced today collectively address our only significant near-term debt maturity on attractive terms, extend out our debt maturity schedule, reduce our overall indebtedness and bolster our corporate liquidity."
Sunstone's current unrestricted cash exceeds the next round of rolling debt - $95 million coming due in April 2015, said the company's CFO John V. Arabia. "While we expect continued growth in comparable property-level earnings in 2012 and beyond, the company now has ample liquidity to execute its business strategy in nearly any economic environment," he added.
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