Slatkin Brothers Land $400M Refi for SoCal Beachfront Hotels

The financing is broken down into two components: a $280 million senior commercial mortgage-backed securities loan for the 198-room Shutters on the Beach and 129-room Hotel Casa del Mar, plus $120 million in mezzanine financing, according to The Real Deal, which first reported the news. 

Citigroup (C) originated the two-year senior CMBS loan, while the mezzanine loan was provided by a group of funds from Goldman Sachs (GS), per TRD.

The deal closed on Tuesday and was arranged by Newmark (NMRK)’s Jordan Roeschlaub and Jonathan Firestone, sources said.

The new loans refinance $430 million in existing debt tied to the hotels. Edward Thomas also provided $47.5 million to help close the deal, repaying a part of previous debt and other costs, per TRD.

The Slatkins developed the beachfront hotels, at 1 Pico Boulevard and 1910 Ocean Way, in the 1990s. Both hotels are rarities in Santa Monica, a city notoriously difficult to develop such properties given strict zoning and environmental rules. 

Roeschlaub and Firestone declined a request to comment, while representatives for the Slatkins, who are the sons of former Beverly Hills Hotel owner Burt Slatkin, did not immediately respond to a request for comment. 

A loan of such size is unusual in any market these days due to high interest rates, but elsewhere in Santa Monica another nine-figure CMBS deal tied to a retail property has hit the proverbial fan.

Mall-giant Macerich was forced to surrender the 527,000-square-foot Santa Monica Place shopping center last month after defaulting on a $300 million loan provided by Wells Fargo (WFC). Although originally set to mature back in 2019, the debt received several extensions before ultimately sliding into special servicing earlier this year. 

Nick Trombola can be reached at NTrombola@commercialobserver.com.