Sonnenblick-Eichner Company Arranges $21 Million Loan for Newly Renovated Palihotel Seattle

USA, Beverly Hills, California. May 16, 2019

Sonnenblick-Eichner Company announced today that it has arranged $21 million of non-recourse first mortgage leasehold financing, on behalf of a partnership between Los Angeles based Lighthouse Investments, LLC and KCB Management, for the 96-room Palihotel Seattle.

Operated by Palisociety, the hotel is located across the street from the world-famous Pike Street Market in downtown Seattle, WA. The newly renovated hotel opened in November of 2018 and the initial funding was sized to a debt yield less than 6% on the first year's projected net operating income. The five-year interim loan also provided for a return of equity above the existing construction loan, as well as significantly reducing the cost of capital for the borrower. The LIBOR-based loan was funded by an institutional debt fund.

Originally built in 1895, the building is both a city landmark and on the federal National Registry of Historic Places. The hotel was extensively renovated in 2017 and 2018. The downtown Seattle market and the Pike Place submarket, have been among the best performing hospitality markets in the country over the last several years.

"We were successful in securing multiple competitive financing quotes despite the fact that the hotel had recently opened and is in ramp-up. In addition to the complexities inherent in leasehold financing, the transaction included Historic Tax Credits, which we had to structure around," said Sonnenblick-Eichner Company Principal Elliot Eichner.

"We have had tremendous success in financing hotels that have recently completed construction, or at Certificate of Occupancy. This allows our clients to realize equity in the project, extend term, lower the cost of capital and quite often relinquish recourse obligations," added Sonnenblick-Eichner Principal Patrick Brown.


Palihotel Seattle
/ SLIDES
Tags: Sonnenblick-Eichner, Hotels, Hospitality, Finance, Debt, real estate, lending, CRE, refinance, Palihotel, Seattle, loan

About Sonnenblick-Eichner Company

Media Contact:

Bruce Beck
President
DB&R
T: 805-777-7971
E: bruce@dbrpr.com
W: http://www.dbrpr.com

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Revenue Management: Focus On Profit

Revenue Management is still a relatively new profession within hotel operations and as such, it continues to evolve. One significant trend in this area is a shift away from using revenue as the foundation to generate key performance indicators (KPIs) and to instead place the emphasis on profit. Traditionally, revenue managers have relied on total revenue per available room (TrevPAR) and revenue per available room (RevPAR) as the basis of their KPIs. Now, some revenue managers are using gross operating profit per available room (GOPPAR) as their primary KPI. This puts profit at the center of revenue management strategy, and managers are increasingly searching for new ways to increase the profitability of their hotels. Return on Investment is the objective of any hotel investment, so it is only logical that profitability and ROI will be emphasized going forward. Another trend is an expanded focus on direct hotel bookings. Revenue managers know that one way to increase profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This tactic also reinforces brand identity and loyalty, and encourages repeat business. In addition, it provides a valuable platform to market the hotel directly to the customer, and to upsell room upgrades or other services to them. Another trend for revenue managers involves automation in their software programs. Revenue management systems with automation are far more desirable than those without it. Automating data entry and logistics increases efficiency, allowing managers to spend more time on formulating strategy. As a bonus, an automated system helps with aggregating and interpreting data. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.