US-based real estate investment trust Braemar Hotels & Resorts has closed on a $363m refinancing deal for five of its luxury hotels.
The loan has an initial two-year term with the potential for three one-year extensions, subject to specific conditions being met.
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This arrangement could extend the loan’s final maturity to 2030, the company said.
Braemar president and CEO Richard Stockton said: “We are pleased to announce the closing of this financing at a very attractive spread.
“This financing addresses our only remaining final debt maturity for 2025 and not only results in a lower cost of capital for the debt on these assets, but also improves our maturity schedule and extends our weighted average maturity.”
The refinancing provides a floating interest rate of secured overnight financing rate (SOFR) +2.52%, which is secured by The Clancy, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, and The Ritz-Carlton Reserve Dorado Beach.
The loan-to-value ratio stands at 48.9%, based on third-party appraisals that valued the properties at a combined $742.2m.
This new financial strategy allowed Braemar to refinance two existing debts, including a $293.2m loan covering four of the properties with a SOFR +2.66% interest rate, due in June 2025, and a $62m loan for The Ritz-Carlton Reserve Dorado Beach with a SOFR +4.75% rate, maturing in March 2026.
Specialising in luxury hotels and resorts, Braemar has effectively reduced its interest costs and addressed its final 2025 debt maturity through refinancing, it said in a release.
In March 2024, activist investor Blackwells Capital attempted to secure representation on Braemar’s board of directors.
However, Braemar strongly opposed the move, citing multiple deficiencies in the Nomination Notice issued on 10 March 2024, and deeming it invalid.
