AJ Capital Refis Graduate Hotels Portfolio With $304M Loan

Nashville-based AJ Capital has sealed a $303.5 million loan to refinance seven properties in its Graduate Hotels portfolio, Commercial Observer can first report.

Aareal Capital Corp. and Barings and provided the five-year, floating-rate loan for the 1,340-key portfolio in university-anchored markets, according to sources familiar with the deal. The boutique hotels are part of a more than 35-property portfolio in the U.S. and the U.K. in the Graduate Hotels brand. Last year, AJ sold all rights to the brand to Hilton, which operates the hotels under franchise agreements while AJ continues to own the properties.

CBRE arranged the transaction with a team consisting of Tom Traynor, Tom Rugg, Mark Finan and Henry Fenmore.

The seven hotels in the refi near major universities include Graduate by Hilton Annapolis (near the U.S. Naval Academy in Annapolis, Md.); Graduate by Hilton Columbus (the Ohio State University) in Columbus, Ohio; Graduate by Hilton East Lansing (Michigan State University) in East Lansing, Mich.; Graduate by Hilton Eugene (University of Oregon) in Eugene, Ore.; Graduate by Hilton Fayetteville (University of Arkansas) in Fayetteville, Ark.; Graduate by Hilton Palo Alto (Stanford University) in Palo Alto, Calif.; and Graduate by Hilton State College (Penn State) in State College, Pa.

The Graduate Hotels collection received a $225 million preferred equity investment from Acore Capital in May 2021 to support investments in the portfolio after the properties experienced challenges while colleges faced restrictions during the COVID-19 pandemic. AJ Capital, which is run by CEO Ben Weprin, launched the Graduate brand in 2014 with its initial locations near the University of Mississippi, University of Georgia and Arizona State University. 

Barings, Aareal and CBRE did not immediately return requests for comment. AJ Capital declined to comment. 

Andrew Coen can be reached at acoen@commercialobserver.com.