CIM Group is expanding its hotel lending beyond the full-service sector with two deals in Florida totaling $63.87 million.
The Los Angeles-based real estate investor and developer announced that its CIM Real Estate Debt Solutions division closed on a senior loan for nearly $35 million to a joint venture between Monarch Alternative Capital and HHM Hotels. The deal was secured by the Aloft/Element dual-branded hotel in Orlando, Florida. CIM Group also closed on a $28.9 million loan to Newbond Holdings secured by the Aloft Tampa Downtown in Tampa, Florida.
CIM Group is extending its reach to focus on select and extended-stay hotels, according to a statement from the company. With business and leisure travel both expected to continue to grow for the foreseeable future, the company views current conditions as an opportunity for expansion as hotel lending for operators from other sources is contracting.
Higher interest rates and tighter lending standards from regional banks have made it increasingly difficult for some developers to secure financing for hotel projects. Full-service providers such as Hilton Worldwide Holdings and Marriott International have noted reduced development because of more expensive and less available credit.
Joseph Delli Santi, chief investment officer of the third largest hotel owner-operator of hotel brands MCR Hotels, told Reuters in June that the "regional banks that used to be active for us nine to 12 months ago are not showing up to finance hotels for us today.”
For CIM Group, the return of business and leisure travel marks an increase in demand for mid-tier hotel options across the country. Aloft provides contemporary casual lodgings, whereas the Element brand provides extended stay options.
The company provides mortgage and mezzanine loans, allowing CIM affiliates to provide bridge and construction financing to owners and developers across the country. Last year, the company and its affiliates provided over $3.8 billion in commercial real estate loans, according to the statement.
In Orlando, the dual-branded Marriott hotel combines 144 keys under the Aloft brand and an additional 140 rooms under Element. Built in 2021 at 5730 and 5750 Central Florida Parkway, the hotel is located along the Interstate 4 corridor near the Orlando Convention Center, SeaWorld Orlando and other nearby parks.
The Aloft Tampa Downtown is a 130-key hotel that opened in 2014. The hotel is an adaptive reuse of what was originally an office tower built in 1965. After a comprehensive redevelopment, the building located at 100 W. Kennedy Blvd. is now one of only three hotels on the growing Tampa Riverwalk, according to the statement.