NEW YORK—When assessing the City Club Hotel, Starwood Property Trust executives were enamored of its location in Midtown Manhattan, its management team and its operating performance.
But those positive variables weren’t enough to justify the US$36-million in financing (including US$13 million in construction financing) the 65-room hotel received recently.
“That independently of itself would have leant itself to a smaller loan,” said Warren de Haan, chief originations officer and managing director of SPT Management LLC.
The deal-clincher in this case was the hotel’s ability to easily expand. The financing—a non-recourse combination bridge/construction loan—will support the construction of up to an additional 66 rooms above the hotel.
“For us, it was adding boxes on top of boxes,” said Boyd W. Fellows, STWD’s director and president.
He added, “The construction is accretive to the value of the hotel.”
STWD officials declined to identify the loan’s terms. De Haan said, however, that terms call for a step-down feature for the loan as the hotel, which is owned by City Club Hotel Realty LLC, hits certain performance milestones.
De Haan said STWD underwrote based on the hotel’s existing cash flow.
“We would love to do more deals like this,” de Haan said.
Contact:
Starwood Property Trust
Boyd Fellows, president and director
Phone: 203.422.8180
Email: bfellows@starwood.com
Warren de Haan
Chief originations officer, managing director of SPT Management
Phone: 310.954.2871
Email: wdehaan@starwood.com