Two of the largest resorts in Hawaii are set for refinancings through the securitized debt market totaling more than $1.3 billion in loans.
Private equity giant Blackstone lined up a $1 billion loan to refinance its Grand Wailea, a full-service luxury hotel with 795 guest rooms on the island of Maui. Meanwhile, Atrium Hospitality completed a $340 million refinance of its Waikiki Beach Marriott Resort & Spa, the third-largest hotel in Hawaii.
Both refinancings come as Hawaii bounces back from travel disruptions caused by COVID-19. Domestic tourism has picked up noticeably, but group and international visitors have been slow to rebound.
In addition, the Maui island market was devastated by widespread wildfires in August 2023 that caused significant destruction to homes and businesses and was closed to travel for months. Parts of the island away from the Grand Wailea are still closed to tourists.
Nearly two years after the natural disaster, the Maui hotel market is still recovering but is showing increased activity, according to CoStar analysis.
Over the past Memorial Day holiday weekend, hotel demand on Maui posted roughly 10% growth per night. Average daily rates crossed the $550 mark on all three days, resulting in revenue per available room growth above 10% for the weekend.
Notably, luxury properties rendered the most RevPAR gains across all hotel classes, indicating affluent travelers incorporated the Hawaiian island into their travel itineraries.
Blackstone's $1 billion loan
JPMorgan Chase will lead a consortium of lenders to provide Blackstone with $1 billion later this month for the Grand Wailea, a Waldorf Astoria Resort, according to presale analysis from bond rating firms Morningstar and Moody's of a commercial mortgage-backed securities offering that will hold the loan.
The new mortgage loan is set to retire $800 million of existing debt scheduled to mature in August. In addition, it will return $181.6 million of equity to Blackstone.
The loan agreement calls for a two-year, floating-rate, interest-only mortgage loan with three 1-year extension options. Blackstone is to enter into an interest-rate cap agreement with the assumed limit of 5% during the initial term.
The as-is appraised value for the 795-key hotel is $1.6 billion, with a per-key value of just over $2 million.
"A $2 million per key valuation speaks to a very well executed property renovation/upgrade, and no expected softness in the demand from luxury travelers," Jan Freitag, national director of hospitality analytics for CoStar Group, told CoStar News.
Since acquiring the property in 2018, Blackstone has invested substantially in property improvements, spending about $353.7 million, according to the bond rating firms.
Blackstone did not immediately respond to CoStar News' request for comment.
High-occupancy hotel
In Honolulu, Wells Fargo Bank and Goldman Sachs Bank originated a $340 million CMBS loan to Atrium on the Waikiki Beach Marriott. The floating-rate loan has a two-year initial term with three 12-month extension options and requires monthly interest-only payments, according to analysis of the deal by bond rating firm KBRA.
The loan paid off $336.5 million in existing debt that was scheduled to mature in December.
Waikiki remains one of the strongest performing hotel markets in the United States, ranking among the few markets with occupancy above 80%. Through April, the 12-month average occupancy reached 80%, the highest across Hawaii, even as Waikiki holds the state's largest concentration of hotel rooms. Fewer than 2% of U.S. markets reached similar occupancy levels.
For the 12 months ended in March, the 1,307-room Waikiki Beach Marriott posted occupancy of 98%, according to KBRA.
Cushman & Wakefield appraised the property in January and concluded an as-is value of $709.3 million.
Atrium did not immediately respond to a request for comment.