Braemar Hotels & Resorts, a hospitality company based in Dallas, Texas, has been given an extension to pay off a $51 million loan that was due in May 2023. During their earnings call for the first quarter, executives of the company revealed that they had secured a six-month extension on the loan for the Hotel Yountville, an 80-room property located in Napa County. Braemar had been negotiating for an extension since last month, according to a previous filing with the Securities & Exchange Commission. At the time, the company had declared that it was considering refinancing or extending the loan’s due date.
Braemar not only secured an interest rate cap set to expire on November 10th, but they also have the option to prolong the loan for another six months. This agreement comes at a time when interest rates are increasing, which makes loan extensions more expensive. Refinancing would lead to greater debt payments. In San Francisco, the Trump Organization and Vornado Realty Trust are looking to extend the lease on their 52-story office building at 555 California Street. Additionally, in New York, Tishman Speyer is asking for a $485 million extension of the commercial mortgage related to 400 Park Avenue.
In May of 2017, Braemar acquired the 6462 Washington Street Hotel Yountville for a total of $96.5 million. The company did not respond when asked to comment on the matter. Braemar is also planning to either refinance or extend the mortgage they have on an additional Yountville property, the Bardessono Hotel and Spa, which was purchased by the firm in 2015 for $85 million. The loan that supports the 62-room hotel will end in August. Richard Stockton, the CEO of Braemar, commented during the earnings call that, “The loan is highly under-leveraged, so we don’t think we’ll have any troubles with either extending or refinancing it.”
Braemar’s actions are taking place as the lodging loan industry in the United States is facing difficulty. According to Trepp, almost $4.1 billion of the $93 billion in outstanding hospitality loans are late as of December. Trepp estimates that $35 billion in lodging loans are due to expire this year.
The effects of the hotel industry’s hardships have already been seen in the Bay Area. In March, Moody’s decreased the grade of a $725 CMBS loan for San Francisco’s two biggest Hilton hotels. At the same time, Highgate and Flynn Properties purchased the Huntington Hotel in Nob Hill after the $56.2 million loan for the building went into non-payment.
