Rendering of the Hyatt House and Hyatt Place at LAX
As a state that’s home to several high-barrier-to-entry markets and destinations that guests love to travel to, it’s no surprise that California is seeing a flurry of activity. Here are a few of the Golden State projects that hoteliers are working on.
Financing Deal for LAX Dual-Brand
George Smith Partners has arranged $50 million in construction financing for the redevelopment of a 258,000-sq.-ft., 13-story office tower. The property will be converted into a 129-key Hyatt House and a 272-key Hyatt Place adjacent to LAX, planned for completion in 2019. The senior construction financing, on behalf of 5959 LLC, an affiliate of California Real Estate Regional Center LLC, was arranged by George Smith Partners’ VP Zachary Streit.
“There is growing demand in the LAX submarket, and the current hotel stock is largely outdated,” explained Streit. “As a result, this new dual-branded offering, which will feature a trendy, mid-century urban design, will be of immediate interest to business and leisure travelers.”
Streit notes that the timing is right for this redevelopment, citing a 2016 report from STR Global showing a 91.5% hotel occupancy rate and a 12.7% year-over-year increase in average daily rate. “Even with demand high and supply low, identifying the right lender was challenging based on several factors,” said Streit. “It was crucial to find a lender who was comfortable with hotel construction financing at this point in the cycle, as well as a mezzanine tranche of EB-5 financing, and an unsubordinated ground lease. Additionally, it was critical that the transaction was structured to comply with High Volatility Commercial Real Estate (HVCRE) banking regulations.”
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