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CMA
April 21, 2017  

Morgan Stanley to Lead $850 Million Floater

A Colony NorthStar partnership has tapped Morgan Stanley to lead an $850 million floating-rate debt package that will refinance a hotel portfolio.

Morgan Stanley will fund 60% of the balance, with J.P. Morgan and Citigroup each supplying 20%. The trio will securitize the senior portion via a stand-alone offering next month.

Eastdil Secured is brokering the debt package for Los Angeles-based Colony NorthStar and its partner, Chatham Lodging of Palm Beach, Fla. Colony NorthStar was formed in January through the $19.1 billion merger of Colony Capital, NorthStar Realty Finance and NorthStar Asset Management. The Los Angeles REIT will use most of the proceeds to retire an $840 million floating-rate debt package originated in 2014 by J.P. Morgan.

The portfolio contains 47 hotels, with 6,094 rooms, in 16 states. The properties were once part of the Innkeepers USA chain. In 2011, a partnership between New York-based Cerberus Capital and Chatham acquired 64 hotels from then-bankrupt Innkeepers for $1 billion. In 2014, NorthStar Realty acquired Cerberus’ stake in 47 of the hotels. That transaction valued the properties at $1.05 billion.

In conjunction with that recapitalization, NorthStar Realty and Chatham lined up the $840 million debt package from J.P. Morgan. It has a two-year term, with three one-year extension options. The bank securitized the $635 million senior portion via a stand-alone offering (JPMCC 2014-INN).

The collateral encompasses 36 extended-stay, nine limited-service and two full-service hotels. The brands include Residence Inn (30 hotels), Hyatt House (five) and Hampton Inn (five).