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Former ARC Hospitality Trust Completes $1.2 Billion Refinancing and Portfolio Acquisition

Hospitality Investors Trust Inc, a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, refinanced two loans and completed the acquisition of the 7-property Summit Hotel Properties portfolio.

 

The Summit Portfolio consists of seven hotel properties and was acquired for $66.8 million. All of the properties have long-term franchise agreements with one of the following brands: Marriott International (Courtyard, Residence Inn and Fairfield Inn), Hilton Hotels (Homewood Suites) or IHG (Staybridge Suites). The properties are located in Germantown, Tennessee and Ridgeland, Mississippi.

 

“We are pleased to announce these refinancing initiatives, which we believe enhance our capital structure by affording us a meaningful reduction of our cost of capital as well as the extension of maturities until 2022 on a significant portion of our mortgage debt,” said Jonathan Mehlman, president and chief executive officer.

 

The new loans, which total approximately $1.225 billion, each carry a 2-year initial term with three 1-year extension options. The loans include a mortgage loan and related mezzanine loans with a total principal balance of $915 million, which are collateralized by 87 of the company’s hotel properties, and a term loan with a principal balance of $310 million, which is collateralized by 28 hotel properties.

 

Citibank, N.A. acted as administrative agent and as collateral agent, and Citigroup and Deutsche Bank acted as joint lead arrangers for the term loan. JPMorgan Chase Bank, National Association was also an initial lender for the term loan.

 

Net proceeds from the mortgage loan were used to refinance an existing loan, which had an aggregate principal balance of $895.4 million with final maturity date of May 2019. The loan was collateralized by 95 hotel properties.

 

Net proceeds from term loan were used to refinance a previous term loan, which had an outstanding principal balance of $235.5 million and a maturity date of August 2020. The loan, which was collateralized by 20 hotel properties, was also used to finance a portion of the Summit Portfolio purchase, as well as to fund reserves for contractual property improvement plans associated with certain hotels collateralized by the mortgage loan.

 

As reported by the DI Wire, the REIT severed ties with AR Global in April and changed its name to Hospitality Investors Trust following an investment by an affiliate of Brookfield Strategic Real Estate Partners II. The REIT is now self-managed.

 

Hospitality Investors Trust focuses on acquiring select-service lodging properties in North America branded by premium national hotel brands. The REIT’s offering went effective in January 2014 and suspended sales activities in November 2015 after raising $911 million in investor equity, according to Summit Investment Research. The company’s $2 billion portfolio is comprised of 148 properties.

 

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