Valencia Lands Fixed Rate Refi at Irving Hotel

Valencia Hotel Group scored a refi deal for its hotel in the DFW suburb of Irving.

The Houston-based hospitality company secured a $19.5 million loan for Texican Court. The five-year, fixed-rate loan is interest-only for the entire term at a rate of 7.74 percent. That includes a buydown of the rate required by the lender, a Wall Street investment bank whose name was not disclosed. The deal was arranged by Sonnenblick-Eichner Company.

Patrick Brown, a principal at Sonnenblick-Eichner, said the company received 18 financing quotes on the transaction. The deal it went with provides a debt yield of less than 12 percent, he said.

Texican Court is a 152-room boutique hotel built in 2019. It has 224 units, ranging from studios up to and three-bedrooms. The property is located at 501 West Las Colinas Boulevard, about 12 miles from downtown Dallas. The location is near Highway 114, which connects to DFW Airport.

The hotel took home an award at this year’s Texas Travel Awards, a contest created by Austin Monthly, San Antonio Magazine and Texas Music. Texican Court was named Best “Big Market” Unique Lodging, CultureMap reported.

Refinancing debt has been a challenge for commercial property owners in today’s tough lending environment.

Banks have grown more wary of lending to commercial property owners, and the spike in interest rates has made debt more expensive in general. Property owners in dire trouble have been forced to sell their properties at a discount. Other distressed properties are returning to lenders.

For example, two Dallas-area hotels owned by Monty Bennett’s Ashford Hospitality Trust landed in a Collin County foreclosure sale, according to data from Roddy’s Foreclosure Listing Service. Bennett opted not to extend commercial-mortgage-backed-securities for the properties after they (and others) failed debt yield tests. The lenders’ representative sued to get a receiver to take control of the hotels.

Valencia Hotel Group has a portfolio of seven properties, according to its website. Six are located throughout Texas; one is located in San Jose.

Sonnenblick-Eichner is a Los Angeles-based real estate investment banking firm that arranges financing for real estate transactions and new developments.