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Thursday, 10 December 2015

Boutique Hotel Specialist Raises $525Mln for Debut Investment Fund

Provenance Hotel Partners, a Portland, Ore., developer and operator of high-end boutique hotels, has gotten into the investment-management business, raising $525 million for its first fund. It's used some of the funds to recapitalize seven hotels it manages, a transaction that included the defeasance of seven CMBS loans with a balance of $167.5 million.

Commercial Real Estate Direct Staff Report

Provenance Hotel Partners, a Portland, Ore., developer and operator of high-end boutique hotels, has gotten into the investment-management business, raising $525 million for its first fund.

It's used some of the proceeds of the fund to recapitalize seven of the nine hotels it manages. It bought out its various partners and refinanced $167.5 million of CMBS debt against the properties. The CMBS loans all were defeased, or replaced by government securities.

The seven properties have a total of 1,240 rooms. Four are in Portland, while the remainder are in Seattle, Tacoma, Wash., and Nashville, Tenn. Last year, they generated a total of $25.3 million of net cash flow, according to servicer data compiled by Trepp LLC.

The mortgages against the properties generally don't start maturing until at least another year. But because cash flow had increased substantially since the loans were written, and the properties' value had climbed as well, they were able to support much more debt.

Provenance plans to raise additional capital on behalf of the fund, Provenance Hotel Partners Fund I, and use that to buy, develop and redevelop additional properties, which it would hold for at least 10 years each. Its aim is to buy properties with between 100 and 300 rooms each that are in the top 25 urban markets in the country.

Provenance is led by Gordon Sondland, its chairman and chief executive, and Bashar Wali, its president. It long has focused...


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