Strategic Gets "Groundbreaking" Hotel Loan

Strategic Hotel Capital has obtained financing of $1.17 billion from Deutsche Bank in a transaction that Strategic believes is "the largest loan ever made to a privately held hotel company."The financing was done through a $910 million commercial mortgage-backed securities offering -- a major portion of which was rated by Moody's Investor Service, Standard & Poor's and Fitch Ratings -- and a $260 million mezzanine loan, according to the Chicago-based Strategic. Fifteen of Strategic's twenty-seven U.S. hotel properties are involved in the securitization, the company reports. Laurence S. Geller, SHC CEO, said that the gap between the expectations of hotel buyers and sellers is beginning to narrow and "should facilitate our search for attractively priced luxury properties with upside potential that can benefit from our style of aggressive asset management." Jon Vaccaro, Deutsche Bank's global head of real estate debt said that the financing -- which is for an initial two-year term, with three one-year extensions -- consists of four tranches: an investment-grade CMBS portion that has been placed with domestic and European life companies, banks, pension funds and money managers; two subordinate mortgage loans placed with U.S. life companies; and a mezzanine loan that has been placed with a Deutsche Bank affiliate and an overseas institutional investor.