CSV Acquires Mezzanine Loan on Extended Stay Hotels Portfolio
NOVEMBER 7, 2008. Carlton Group Chairman Howard L. Michaels announced that Carlton Strategic Ventures ("CSV"), the principal investment and merchant banking group of the Carlton Group, has acquired a $214 million participation in the M7 mezzanine loan tranche on the Extended Stay Hotels portfolio. The M7 loan tranche is a senior mezzanine level tranche with over $1 billion of subordinate debt and borrower equity.
The M7 mezzanine loan is part of a $7.4 billion financing provided by Wachovia Bank, Bank of America, Merrill Lynch, and Bear Stearns to fund the acquisition of Extended Stay Hotels, Inc. by the Lightstone Group in June 2007. The primary collateral underlying the loan is a portfolio of 664 extended stay hotel properties, as well as a pledge of all cash flow from 17 ground leased properties, which comprise approximately 75,683 hotel rooms in the United States and Canada. Certain of the investors that hold mezzanine tranche positions in ESH include Fortress Investment Group, SL Green Realty Corp., Square Mile Capital Management, Archon Group, Ashford Hospitality Trust, and numerous other highly-regarded financial institutions and investors.
CSV acquires discounted performing loan positions on all commercial real estate asset types. Over the last nine months, CSV has acquired over $500 million of discounted performing loan assets, consisting of first mortgages, B-notes and mezzanine loans. CSV is especially aggressive on loans secured by office and hospitality assets.
In addition and separate from the foregoing loan acquisitions, CSV Capital has a $400 million principal lending joint venture with a major insurance company to originate mezzanine and preferred equity investments up to 85% of the capital structure on cash-flowing assets. This vehicle is also actively pursuing the acquisition of high quality, performing, discounted loan assets, which are available in the secondary market.
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