Weekly Real Estate News
Summary
Braemar announced November 10 that it closed a $358 million CMBS refinancing covering four luxury hotels. The floating-rate loan cuts the weighted-average spread by about 104 basis points.
Simple Content Summary: Braemar Hotels & Resorts announced a completed $358 million CMBS refinancing of four luxury hotels November 10. The new floating-rate loan lowers the weighted-average spread by about 104 basis points, while SOFR exposure remains.
Braemar Hotels & Resorts has refinanced four luxury hotels with a $358 million commercial mortgage-backed securities loan, replacing two existing facilities and lowering the spread it pays over the secured overnight financing rate. The company announced the completed transaction November 10 in a release filed with the Securities and Exchange Commission. The original source document provides the underlying figures and disclosure.
The collateral includes The Ritz-Carlton St. Thomas, The Ritz-Carlton Reserve Dorado Beach, The Notary Hotel and Sofitel Chicago Magnificent Mile. The interest-only financing carries a floating rate of SOFR plus 2.37%, with an initial two-year term and three one-year extension options. Those extensions are subject to conditions; November 2031 is the potential final maturity rather than an unconditional five-year term.
The old facilities totaled approximately $290.4 million outstanding as of September 30. The St. Thomas loan had a spread of 4.91 percentage points over SOFR, while the loan secured by the other three hotels carried a 2.83-point spread. The new financing cuts the weighted-average spread by about 104 basis points, from 3.41 to 2.37 points, according to Braemar.
A lower contractual spread should reduce interest expense relative to an otherwise comparable balance, but the company borrowed more principal than the two replaced loan balances. Because the new debt remains floating-rate, actual future interest expense will depend on SOFR, the outstanding principal and any hedging or other financing arrangements. A spread reduction should not be confused with a guaranteed decline in total debt service.
The final $358 million financing also came in $42 million below the $400 million estimate Braemar provided in an October investor presentation. The refinancing illustrates continuing lender appetite for selected luxury hotel collateral, although it does not establish that the broader commercial mortgage market has recovered.
Braemar has been restructuring its portfolio and management arrangements. This four-hotel financing is distinct from the company’s earlier refinancing of The Ritz-Carlton Lake Tahoe, which WRE has already covered.
