Two of Hawaii’s top resorts are poised for refinancing through the securitized debt market, totaling over $1.3 billion in loans, signaling a significant move in the hospitality sector as the state continues to rebound from the impacts of COVID-19.
Private equity powerhouse Blackstone has arranged a substantial $1 billion loan to refinance its Grand Wailea hotel, a luxury destination boasting 795 guest rooms located on Maui.
At the same time, Atrium Hospitality has successfully completed a $340 million refinancing of the Waikiki Beach Marriott Resort & Spa, which stands as the third-largest hotel in Hawaii.
These refinancing efforts come at a crucial time when Hawaii is witnessing a resurgence in domestic tourism, although group and international travel have yet to fully recover from previous disruptions.
The Maui region, in particular, faced immense challenges following the devastating wildfires that swept through the island in August 2023, resulting in widespread destruction and prolonged travel restrictions.
Despite these setbacks, the Maui hotel market is showing signs of recovery, with recent data reflecting an uptick in demand.
During the recent Memorial Day holiday weekend, hotel bookings on Maui surged, demonstrating a 10% increase in nightly demand compared to previous years.
Average daily room rates soared past the $550 mark for the holiday weekend, leading to revenue per available room growth exceeding 10%.
Luxury accommodations, in particular, have shown remarkable RevPAR (Revenue Per Available Room) gains across various hotel categories, indicating a propensity among affluent travelers to plan visits to the Hawaiian islands.
As part of the refinancing, JPMorgan Chase is set to lead a consortium of lenders providing Blackstone with $1 billion for the Grand Wailea later this month.
This financing will not only replace $800 million of existing debt set to mature in August but will also return $181.6 million in equity to Blackstone.
The loan terms include a two-year floating-rate, interest-only agreement with three one-year extension options, aimed at providing flexibility during the market recovery.
In addition, Blackstone will enter into an interest-rate cap agreement with an assumed maximum of 5% for the initial term of the loan, ensuring the financial viability of the investment.
The current appraised value of the Grand Wailea stands at $1.6 billion, translating to slightly over $2 million per key, reflecting the quality renovations and upgrades that have been made.
Jan Freitag, the national director of hospitality analytics for CoStar Group, commented on the impressive valuation, underscoring the effective property improvements executed by Blackstone since its acquisition in 2018, where substantial investment reaching $353.7 million has been recorded.
In Honolulu, the Waikiki Beach Marriott Resort & Spa has also secured substantial financing, with Wells Fargo Bank and Goldman Sachs Bank issuing a $340 million CMBS loan to Atrium.
Details of the agreement indicate that this floating-rate loan has a two-year initial term accompanied by three 12-month extension options, necessitating monthly interest-only payments.
This refinancing allows Atrium to retire $336.5 million in existing debt that was scheduled to mature in December, providing a much-needed financial reset for the property.
Waikiki remains one of the most robust hotel markets across the United States, consistently enjoying occupancy rates exceeding 80%.
Data reveals that for the 12-month period ending in March, the 1,307-room Waikiki Beach Marriott achieved a remarkable occupancy rate of 98%.
Cushman & Wakefield appraised the property at $709.3 million in January, reinforcing its standing in the competitive hospitality landscape of Hawaii.
Both companies, Blackstone and Atrium, have yet to provide comments regarding their refinancing activities.
image source from：costar
