Mission Capital Advisors' debt & equity finance team arranged a $20.75-million ramp loan for the Hotel Karlan, a 174-key, soft-branded DoubleTree by Hilton located in northern San Diego.
The Mission Capital team of Gregg Applefield, Alex Draganiuk and Lexington Henn represented property owner SD Carmel Hotel Partners in securing the three-year loan from a private equity fund. The first-mortgage financing will replace the property’s renovation loan and a preferred equity loan.
After acquiring the property in 2014, the sponsor implemented renovations to the property, enhancing guestrooms, common areas, food-and-beverage outlets and meeting and spa facilities.
“In today’s market, it’s not uncommon for hoteliers to procure a ramp loan post-renovation prior to securing permanent financing, and the sponsor turned to us because of our extensive experience in this arena,” Applefield said in a statement. “Through a strong marketing effort, we were able to provide the sponsor with numerous competitive offers, including fixed-rate and floating-rate options with very high leverage for a hotel.”
The multimillion-dollar renovation includes remodeled guestrooms, a new dining concept – Asado Grill – and Black Horse Pub, a completely upgraded spa with fitness center and two upgraded pools with outdoor cabanas. Hotel Karlan also includes six distinct meeting spaces, totaling more than 14,000 square feet, as well as a pre-function space and an event lawn for weddings, musical performances and other social events. Additionally, the hotel has a 4,000-square-foot ballroom.
Located in the North County region of San Diego, the property is positioned in an area frequented by vacationers and corporate travelers. The North County area benefits from a corporate market driven by biotech and telecom businesses.
“With few comparable properties in the submarket, it was something of a challenge for lenders to quantify Hotel Karlan’s potential and underwrite a loan,” Draganiuk said in a statement. “It was critical, therefore, to convey the excellent track record of the hotel’s owner and its operator in repositioning and managing successful hotels.”
Laurus Corporation, a sponsor of SD Carmel Hotel Partners, is a real estate investment and development company that specializes in hotels and resorts, office buildings, multifamily and mixed-use properties. With more than $1.2 billion in assets under management, Laurus employs an entrepreneurial investment strategy designed to consistently achieve attractive risk-adjusted returns by creating capital appreciation opportunities through repositioning, restructuring, re-development and intensive post-acquisition asset management. The company was founded in 1999 by Andres and Jean Paul Szita, and is affiliated with Ethika Investments, a real estate private equity firm
Hotel Karlan is managed by San Clemente-based Evolution Hospitality, a seasoned hotel operator that currently manages 13 hospitality properties in San Diego.