Lone Star Real Estate Fund VI has secured $500 million in fresh financing for a six-property hotel portfolio set to mature in November.
JPMorgan Chase and Goldman Sachs co-originated the loan, with JPMorgan covering 55% and Goldman Sachs the remaining 45%, according to Kroll Bond Rating Agency, which is rating a new commercial mortgage-backed securities deal that will hold the debt.
The floating-rate, interest-only financing carries an initial two-year term with three 1-year extension options.
The refinancing demonstrates continued appetite for financing premium hotels. Dallas-based Lone Star Funds extracted about $65.2 million in equity while refinancing $428.5 million in existing debt. Four of the six properties previously served as collateral in the JPMCC 2021-HTL5 CMBS transaction, originally acquired in November 2021 for $551 million.
The portfolio's performance has exceeded pre-pandemic levels. Net cash flow reached $53.1 million for the trailing 12 months ended in November, surpassing the 2019 pre-pandemic high of $41 million, according to KBRA.
The six full-service hotels total 2,049 keys across Georgia, Texas, California and Virginia. The 507-room Whitley, a Luxury Collection hotel in Atlanta, is the largest property backing the loan.
All hotels operate under Marriott International flags, including Westin, Luxury Collection, Marriott and Sheraton.
Portfolio occupancy reached 65.8% with an average daily rate of $212.02 for the trailing 12 months ended in November, according to KBRA. Revenue per available room hit $139.41, achieving rates of 106.1% for occupancy, 109.3% for average daily rate and 116.6% for revenue per available room against competitive sets.
The portfolio underwent $72.1 million in capital improvements since 2021, or $35,176 per key. Renovations included lobby refurbishments, guestroom updates, meeting space upgrades and building system improvements.
Merritt Hospitality, an affiliate of HEI Hotels & Resorts, operates five properties representing 87.3% of the portfolio. Marriott Hotel Services manages the Westfields Marriott Washington Dulles, a 336-key hotel near Dulles International Airport in the greater Washington area, directly.
Lone Star did not immediately respond to CoStar News' request for comment.