Done Deals: JLL arranges $58.5 million refinancing of two-property hotel portfolio in Fort Walton Beach, FL

Rebecca VanReken

CHICAGO, IL – JLL announces that it has arranged a $58.5 million refinancing for the leasehold interest on a hotel portfolio comprising two adjacent beachfront hotels totaling 330 keys located in Fort Walton Beach, Florida.

The hotels reside on a ground lease held with the United States Air Force with 45 years of remaining term.

JLL worked on behalf of the borrower, Innisfree Hotels and its partner, the Band of Poarch Creek Indians, to place the 10-year, fixed-rate acquisition loan with Ladder Capital Finance LLC.

Nicole Aguiar

Proceeds were used to pay off the original construction financing and provided more than $8.4 million of cash back to the borrower.

The portfolio comprises the 178-room Hilton Garden Inn Fort Walton Beach and the 152-room Holiday Inn Resort Fort Walton Beach, which are two beachfront hotels on the Gulf Coast.

The Hilton Garden Inn, located at 1297 Miracle Strip Parkway SE, was completed in 2017 and features 5,000 square feet of event space; an outdoor swimming pool, lazy river with rock waterfalls, Whirlpool spa, tiki bar and fire pits; indoor, heated pool; fitness center, 24-hour business center; and The Garden Grille and Bar restaurant.

Jeff Bucaro

Situated at 1299 Miracle Strip Parkway SE, the Holiday Inn Resort opened in 2014 and features 2,498 square feet of even space; an outdoor pool, lazy river, Whirlpool spa and pool bar; indoor pool; fitness center, game room, sundry shop; business center; and Riptides Grille & Tiki Bar restaurant.

The portfolio is on Santa Rose Island, a three-mile stretch of waterfront land bookended by protected national parks, which makes the area an extremely high-barriers-to-entry market.

The five-story hotels are across the street from the 24,000-square-foot Emerald Coast Convention Center and within a five-mile radius of Gulfarium Marine Adventure Park, Wild Willy’s Adventure Zone, Escape Zone 60, Okaloosa Island Fishing Pier, Eglin Air Force Base, Fort Walton Beach Golf Club, Hurlburt Field and The City of Fort Walton Beach Heritage Park & Cultural Center.

Brooks Moore

The JLL Capital Markets team representing the borrower was led by managing director Jeff Bucaro, managing director Rebecca VanReken and director Nicole Aguiar.

The two-property portfolio represents the ninth and tenth properties that members of this team have closed for Innisfree Hotels.

“We knew this would be a more difficult financing assignment given the limited operating history of one of the assets combined with the shorter-term ground lease,” said Brooks Moore, CFO of Innisfree Hotels. “As always, this team performed exceptionally well and closed the transaction during a very volatile time in the CMBS markets.”

“It is typically challenging to secure permanent debt financing on hotels with limited operating history – especially when a return of equity is involved,” Bucaro added.

“But Innisfree is an exceptional owner/operator with an amazing track record as evidenced by their new hotels consistently outperforming the market within a month or two of opening.”

Deal secured by Holliday Fenoglio Fowler LP (“HFF”) prior to being acquired by JLL on July 1, 2019.

CONTACTS:

Jeff Bucaro, JLL Managing Director

Phone: +1 312 528 3678

Email: Jeff.Bucaro@am.jll.com

Rebecca VanReken, JLL Managing Director

Phone: +1 407 745 3900

Email: Rebecca.VanReken@am.jll.com

Kimberly Steele

Phone: +1 713 852 3420