Goldman Sachs Gives Blackstone $215M CMBS Loan for Maui Resort Buy
By Matt Grossman November 2, 2018 4:23 pm
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Blackstone‘s appetite for luxury lodgings—and the CMBS debt to fund them—appears to be yet unsated as the calendar turns to November.
The giant private equity firm has borrowed $215 million in a securitized debt package from Goldman Sachs to buy a luxury resort in Maui, according to a report from Fitch Ratings, which analyzed the transaction.
The two-year floating-rate loan—which comes with five one-year extension options—funded Blackstone’s purchase of the Ritz-Carlton Kapalua, a resort that overlooks a public beach on the Hawaiian island’s northwest shore. Blackstone contributed $72 million in equity to the deal to help fund the $275 million purchase price and pay closing costs, an arrangement that sets the loan-to-value ratio for the Goldman debt at 78.2 percent.
A joint venture that yoked together Ares Management (ARES), SMW Hospitality and Trinity Real Estate Investments offloaded the resort to the ravenous New York City-based asset manager. The trio bought the property for $210 million two years ago, according to Hawaii News Now, a Honolulu outlet.
The 300-room hotel, built in 1992, stands on a 49-acre property it shares with a golf course, a three-tiered swimming pool and seven restaurants. Located on a stretch of coastline sprinkled with beachfront housing developments and other high-end lodgings known as Kapalua, the hotel is on the far side of the West Maui Mountains from Kahului, the city at the center of the island—Hawaii’s second largest—that hosts its international airport.
Other buildings on the hotel grounds include 166 privately owned residential suites that do not serve as collateral for the Goldman Sachs debt.
Rooms at the hotel rented for an average of $422 per night in 2017, 8 percent higher than the the typical going rate in 2015. Including food and beverage revenue, the hotel earned $9 million last year in net cash flow. That was much higher than 2016’s tally of $7.8 million, but a falloff from 2015’s $9.8 million, which Fitch data attributed to a big decline in restaurant income. (One major dining room is closed for renovations.)
Tourist visits to the island have grown nearly 40 percent over the last 30 years, according to the Hawaii Department of Business, Economic Development & Tourism. In recent years, improvements to passenger-jet reliability have allowed airlines to fly smaller planes than before on routes between the 50th state and the mainland’s west coast, increasing competition and lowering ticket prices. Southwest Airlines has said it’d begin selling seats on its inaugural routes to Maui from four California cities by the end of the year.
Blackstone’s 2018 shopping spree for posh resort properties ran up one of its biggest bills in May, when the company pulled in $1.1 billion in CMBS debt to buy three hotels that included the Grand Wailea resort, a Maui neighbor to the Ritz-Carlton.
In late June, the private-equity fund made a big outlay at the lower end of the hotels market, taking on another $1 billion in securitized mortgages to buy a portfolio of hundreds of La Quinta hotels.
Neither lender nor borrower representatives responded in time to an inquiry.
