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CMA
June 23, 2017  

Tishman Team Seeks $557 Million on 2 Hotels

A partnership between Tishman Hotel & Realty and MetLife is seeking to line up $557 million of floating-rate debt to refinance hotels in New York and Chicago.

The duo wants to borrow $312 million on the 873-room Westin New York at Times Square and $245 million on the 1,218-room Sheraton Grand Chicago. JLL is advising the partnership, which prefers terms of 3-5 years.

The partnership currently has $544 million of debt on the hotels. For each property, it has separate loans on the buildings and the underlying land — four loans in total. This time, it is seeking one loan on each property that would be cross-collateralized by both components.

New York-based Tishman developed the Sheraton in 1992 and the Westin a decade later.

The Sheraton, formerly known as the Sheraton Chicago Hotel & Towers, was built on a 2.3-acre parcel controlled by Chicago investor Fred Eychaner. Tishman exercised an option to buy the parcel in 2009, paying $54.6 million.

The Westin was built on 0.4 acre owned by New York City and New York State. Tishman exercised a purchase option on the land in 2014, paying $44.1 million.

Along the way, Tishman sold a roughly 25% interest in the properties to Lehman Brothers funds, whose management was later taken over by Silverpeak Real Estate of New York. Silverpeak sold that stake to MetLife in 2014.

The Westin currently has $305 million of debt — $250 million on the leasehold interest and $55 million on the ground. The Sheraton has $239 million of debt — $171 million on the leasehold interest and $68 million on the ground.

Wells Fargo originated the floating-rate loans on the two leasehold interests in 2014. The bank securitized a $210 million portion of the Westin loan and all of the Sheraton loan in a stand-alone offering (WFCM 2014-TISH).

J.P. Morgan originated the ground loan on the Sheraton in 2011 and securitized it via a $1.4 billion pooled offering (JPMCC 2011-C4). That fixed-rate mortgage matures next April.

Wells originated the ground loan on the Westin in 2014 and securitized it via a $1.3 billion pooled offering (WFRBS 2014-LC14). That fixed-rate loan matures in 2019.

Net operating income from the leasehold interest in the two hotels totaled $61.3 million last year, according to a servicer report. That was in line with 2015 and down from $65.1 million in 2014.