JLL arranges $126m refinance for hotel resort.
The 196-key Four Seasons Resort Nevis has long been recognized as one of the best resorts in the world by major travel publications including Conde Nast Traveler and Andrew Harper's Hideaway Report.
Jones Lang LaSalle generated strong bids from nine major lenders, including two principal bids not conditioned upon successful securitization or syndication, which ultimately resulted in an unprecedented low cost financing for the borrower. The transaction was awarded to a balance sheet lender, which not only offered a loan with high proceeds at a very competitive spread, but also was able to address key objectives of the borrower, including prepayment flexibility and assumability.
"The refinancing retired the existing low leverage, high coupon, traditional loan encumbering the property," said Arthur Adler, managing director and CEO for Jones Lang LaSalle Hotels.
As a Caribbean transaction, the refinancing was subject to more stringent underwriting criteria than a comparable U.S. hotel. Moreover, leverage levels much above 60% have not been historically available from the traditional Caribbean lending community. To access competitive financing, many structural hurdles had to be resolved. For example, to enhance its ability to efficiently securitize the loan in the future, the lender required political risk insurance, as Nevis does not have a sovereign rating. Also, being in a region prone to hurricanes, Jones Lang LaSalle needed to demonstrate that natural and engineered tropical storm and hurricane protection systems constructed by the borrower to reduce natural risk have been effective. In addition, the borrower wanted the refinancing to retire existing debt and provide a distribution to the owner. Overall, Jones Lang LaSalle successfully negotiated loan terms that met the borrower's objectives for maximizing proceeds and minimizing cost.
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|Publication:||Real Estate Weekly|
|Date:||Dec 14, 2005|
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