In a significant financial move, two of Hawaii’s largest resorts are set to secure over $1.3 billion through the securitized debt market to refinance their existing loans.
Private equity powerhouse Blackstone has arranged a $1 billion loan to refinance the Grand Wailea, a luxurious hotel situated on the island of Maui, which boasts 795 guest rooms.
Simultaneously, Atrium Hospitality has finalized a $340 million refinancing deal for its Waikiki Beach Marriott Resort & Spa, recognized as the third-largest hotel in the state.
These transactions occur against a backdrop of Hawaii’s gradual recovery from the disruptions caused by the COVID-19 pandemic.
While domestic tourism has seen a noticeable uptick, the return of group and international travelers has been slower to materialize.
The Maui market has faced additional challenges due to devastating wildfires in August 2023, which resulted in extensive damage to both homes and businesses, leading to travel restrictions for several months.
Parts of Maui, away from the Grand Wailea, remain closed to tourists as recovery efforts continue.
According to recent analysis by CoStar, the Maui hotel market is showing signs of renewed activity.
During the recent Memorial Day weekend, hotel demand on the island rebounded with roughly 10% growth per night, leading to average daily rates exceeding $550 on each of the three days.
This surge resulted in revenue per available room (RevPAR) growth surpassing 10% for the weekend, particularly among luxury properties, which gained the most indicates that high-end travelers are actively including Hawaii in their travel plans.
JPMorgan Chase is leading a group of lenders set to provide Blackstone with the $1 billion loan for the Grand Wailea, which is categorized as a Waldorf Astoria Resort, according to pre-sale analyses from bond rating agencies Morningstar and Moody’s.
The new mortgage is designed to retire $800 million of existing debt that is due to mature in August, and it will return $181.6 million of equity to Blackstone.
The terms of the loan include a two-year, floating-rate, interest-only structure, with three optional one-year extensions available.
To mitigate interest rate risk, Blackstone will also enter into an interest-rate cap agreement that assumes a limit of 5% during the loan’s initial term.
CoStar’s analysis appraises the 795-key Grand Wailea at an ‘as-is’ value of $1.6 billion, equating to just over $2 million per room.
Jan Freitag, national director of hospitality analytics for CoStar Group, noted that a valuation of $2 million per key reflects successful property renovations and a sustained demand from luxury tourists.
Since its acquisition of the Grand Wailea in 2018, Blackstone has reportedly invested about $353.7 million in significant property upgrades.
In a parallel financing effort, Wells Fargo Bank and Goldman Sachs Bank have originated a $340 million CMBS loan for Atrium’s Waikiki Beach Marriott.
This floating-rate loan features a two-year initial term, accompanied by three potential 12-month extensions, and mandates monthly interest-only payments.
The new loan has successfully paid off $336.5 million in existing debt, which was set to mature in December.
Waikiki continues to stand out as one of the strongest hotel markets in the United States, with occupancy rates consistently exceeding 80%.
Through April, the 12-month average occupancy in Waikiki reached 80%, the highest across Hawaii, emphasizing the region’s resilience, particularly as it accommodates the largest number of hotel rooms in the state.
For the 12 months ending in March, the 1,307-room Waikiki Beach Marriott recorded an impressive 98% occupancy rate, according to KBRA.
In January, Cushman & Wakefield appraised the property, arriving at an ‘as-is’ valuation of $709.3 million.
Neither Blackstone nor Atrium provided immediate comments following the refinancing announcements.
image source from：costar
