The transaction provided A&R Hospitality with a well-earned cash-out of their significant imputed equity in the portfolio. A&R will leverage the cash-out proceeds realized as a result of this execution to recapitalize the equity from its assets and to serve as a key driver for their roll-up strategy to launch its own LP-GP fund.
CHICAGO – Mag Mile Capital announce that Rushi Shah, CEO, and Prabhat Jayara, VP of Underwriting & Originations, recently arranged a $63 million CMBS loan on behalf of their client – A&R Hospitality – for the purpose of refinancing a portfolio of nine limited/select and extended-stay hotels, which featured a large amount of cash out proceeds. The hotels are primarily located in the popular Gulf Coast region of Alabama and Florida (also known as 'Florabama region') in the cities of Gulf Shores (AL), Mobile (AL), Daphne (AL), and Pensacola (FL). Mag Mile Capital is a boutique mortgage banking firm that offers acquisition financing and recapitalization services with preferred access nationwide to high-leverage, non-recourse, commercial real estate bridge, construction, and permanent loans with cash out for hotels, self-storage, multifamily, industrial, retail, office, and other asset classes. A&R Hospitality is a vertically integrated institutional owner and developer of assets with a full-service development business that includes in-house construction, design, procurement, and management departments.
"The borrower is an established client of ours, and we have completed multiple transactions for them over the years," said Rushi Shah. "This portfolio is especially attractive because it is made up of mostly Gulf Shores, Alabama assets with one asset being in Orange Beach, Alabama – many of which sit close to the beach. Known colloquially as the Redneck Riviera, these locations are celebrated for beautiful beaches, great hospitality, and summers filled with music festivals. A couple of the assets in the subject portfolio sit in the Pensacola region – a growing real estate market that boasts great fishing and golf excursions, beautiful scenery, and the largest artificial reef in the U.S. This was a fantastic execution, and we were very happy to assist a valued client in the consummation of their business plan."
The transaction provided A&R Hospitality with a well-earned cash-out of their significant imputed equity in the portfolio. A&R will leverage the cash-out proceeds realized as a result of this execution to recapitalize the equity from its assets and to serve as a key driver for their roll-up strategy to launch its own LP-GP fund. "Rushi Shah and Mag Mile Capital used their vast network of relationships to put together a syndicate of 3 powerhouse lenders: Société Générale, Bank of Montreal, and Goldman Sachs. This created strong demand for the loan in the secondary market," said Ken Patel, CEO of A&R Hospitality. "Markets were volatile during the loan closing process, however, Mag Mile Capital maneuvered through the volatility and handled new information swiftly to bring a favorable outcome to the transaction."
"The cash out proceeds will allow us to scale our roll-up strategy for a newly formed fund, where we will raise additional LP capital to add assets to our portfolio," said Zach Hoyt, President of Development at A&R Group. "This transaction allows us to deepen our relationship with Mag Mile Capital as we continue to look to grow our portfolio."
"It is always a pleasure working with A&R Group's talented team because they are sophisticated, with a strong accounting infrastructure, timely reporting, and an ingrained understanding of market conditions, resulting in a banker-client relationship of like-minded teams." said Prabhat Jayara, VP of Underwriting & Originations at Mag Mile Capital.
- Mag Mile Capital: Multiple Hotel Portfolio Located in U.S. Gulf Shores Region
- Assets: Beachside Resort Hotel, Gulf Shores, Ala; Fairfield Inn & Suites Orange Beach, Ala; Home2 Suites Daphne, Ala; Home2 Suites Mobile, Ala; Motel 6 Gulf Shores, Ala.; Quality Inn Gulf Shores, Ala.; Red Roof Inn Gulf Shores, Ala; Red Roof Inn Pensacola, Fla.; Staybridge Suites Gulf Shores, Ala – 724 total keys
- Total Loan Amount: $63,000,000
- Loan-to-Value: 60%
- Loan Type: CMBS Cash Out
- Interest Rate: 6.06% (Term SOFR swaps + 360 bps)
- Amortization: 30 years
- Loan Terms: 10 years; 4 years Interest Only
- Borrower: A&R Group LLC
- Closing Date: 8/4/2022
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