Hilton, Marriott and Hyatt-focused hotel REIT closes $1B refi amid industry growth

Morgan Stanley, Citigroup and Deutsche Bank provided the debt on the properties in Chicago, Miami, SoCal and others

The Homewood Suites by Hilton in Chicago (Credit: Google Maps)
The Homewood Suites by Hilton in Chicago (Credit: Google Maps)

Hospitality Investors Trust, a real estate investment trust that primarily owns Hilton, Marriott and Hyatt brands, closed a $1.04 billion refinancing deal on dozens of hotel properties across the country. The portfolio includes three hotels in Chicago, three in Southern California and two in Miami.

Hospitality Investors Trust CEO Jonathan P. Mehlman

Hospitality Investors Trust CEO Jonathan P. Mehlman

The refinancing package includes $870 million of senior debt secured by 92 properties across the country, along with $170 million between two mezzanine loans, records show. Morgan Stanley, Citigroup, Deutsche Bank, Goldman Sacks, and JPMorgan provided the financing. It comes as hotels around the country have recorded an increase in occupancy.

The loan was disclosed in Hospitality Investor’s Securities and Exchange Commission filing last week, but just hit property records on Friday.

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The properties comprise about two-thirds of the REIT’s entire 144-hotel portfolio. They include several Hampton Inn, Hyatt Place, and Homewood Suites by Hilton locations. Among them is Chicago’s Homewood Suites by Hilton, at 40 E. Grand Avenue in River North. Hotels in Chicago’s central business district raked in about $2.7 billion in revenue in 2018, a 9 percent jump over 2017.

Around $961 million of the financing package went to repay the existing debt. Some $10 million was set aside for property improvements and $25 million is working capital.

The refinancing closed on May 1, a day before the REIT announced that its CFO, Edward Hoganson, was resigning to take a position with an undisclosed hotel management company.

Hospitality Investors — previously known as American Realty Capital Hospitality Trust — has been under fire over a 2017 investment deal with Brookfield. The deal gave Brookfield substantial control over the company, and led Hospitality Investors to suspend stockholder distributions, according to DIWire, a news outlet.