Goldman Sachs restructures $1.4bn hotel debt

The opportunity real estate funds platform of the Wall Street bank arranges a five-year loan from Deutsche Bank to refinance $1.4b of debt on 168 of its hotels. In addition, the Abu Dhabi Investment Authority has invested $475 million into its portfolio.

Goldman Sachs’ real estate opportunity fund platform Whitehall Real Estate Funds has restructured $1.42 billion of debt coming due on one of its largest hotel portfolios, eliminating impending due dates on the portfolio.

According to a report by the Wall Street Journal, Deutsche Bank is refinancing the debt on 138 hotels that Whitehall bought from North Dakota hotelier Gary Tharaldson in 2006 with a $975 million five-year, fixed-rate loan. An extra $30 million went to covering closing costs another expenses.

A source familiar with the matter said that the sovereign wealth fund Abu Dhabi Investment Authority will inject $475 million into the portfolio in return for a preferred equity stake in the properties.

In addition, the refinancing will enable Goldman Sachs to meet its debt obligations on 30 midscale hotels bought by Whitehall in 2007 from the former CNL Hotels & Resorts.

Before the refinancing, most of the debt on those portfolios was expected to be due by April 2012. A $650 million senior mortgage had been delinquent since coming due without payment last month, constituting a significant portion of the debt.

This is not the first time Whitehall has restructured debt from its hotel portfolios. In late 2010, the Goldman funds reworked and extended $1.1 billion of debt on its Equity Inns portfolio of 132 hotels that it bought in 2007. In total, the fund has restructured $18 billion of debt on its commercial real estate holdings since January 2010.

The source said that these were the last of Whitehall's hotels that needed debt restructuring.

The hotels carry brands such as Marriott International's Courtyard by Marriott and Fairfield Inn; Hilton Worldwide's Hampton Inn and Choice Hotels International's Comfort Inn.