The Real Deal New York

LA firm refis Times Square hotel portfolio with $161M in loans

Gehr Group gets loans for Four Points, Fairfield Inn
By Katherine Clarke | July 06, 2016 05:20PM

Kevin Davis and the Four Points by Sheraton Hotel at 326 West 40th Street in Times Square

The Gehr Group, a Los Angeles-based firm with a growing hospitality division, has refinanced loans on a Times Square hotel portfolio to the tune of $161 million.

Gehr scored three separate loans from different lenders to refinance parts of the deal, including a $46.7 million loan from Wells Fargo to refinance its fee interest in the Four Points by Sheraton Hotel at 326 West 40th Street and a $54.5 million loan from Guardian Life Insurance Company to refinance the leasehold.

The company’s fee interest in another hotel, the Fairfield Inn & Suites at 330 West 40th Street, was refinanced with a $60 million CMBS loan originated by French bank Natixis.

All three loans were locked in at interest rates in the mid 4 percent range, said David Lifschitz, CEO of Gehr.

The loans replaced a CMBS loan securitized by Deutsche Bank and UBS in 2011. Gehr is holding off on the leasehold financing for the Fairfield Inn until the property stabilizes following a $4 million renovation of the rooms and corridors, he said.

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David Lifschitz

Lifschitz said that despite the sluggish hotel market, lenders had been receptive to that deal, given where the properties are located.

“We haven’t had problems with occupancy,” he said. “There is a lot of demand in Midtown Manhattan.”

JLL’s TRData LogoTINY Kevin Davis, who brokered the deal alongside colleagues Jeff Davis and Dustin Stolly, said “it’s no secret the New York hotel market has been challenged over last year or so because of new supply. However, we’re finding financing opportunities continue to get a strong audience with lenders by virtue of fact that its New York, which is the largest and most liquid hotel market in the world.” The Brexit vote, Davis added, would make New York even more attractive and is likely to boost hotel valuations.

Jonathan Falik of JF Capital also consulted on the deal.

Gehr is in acquisition mode, Lifschitz said. The firm recently hired Thuong Luong, a former executive at Laurus Corporation, as chief investment officer for its new division, Gehr Hospitality, which will own and operate the firm’s hospitality portfolio.