Working on behalf of a longstanding client, Highland placed the loan with a conduit lender which had proven its ability to perform on a similar asset. The proceeds of the loan were used to refinance existing debt and to provide significant capital for future reinvestment into the asset, reserves for estate tax planning, and other sponsor investment opportunities.
Given the superb location, across El Camino Real from Stanford University, the outstanding historical performance of the hotel, and the impeccable track record of the Sponsor, the financing request generated strong interest from a wide array of lenders, including life companies, CMBS providers, and pension funds. In a very volatile capital markets environment, especially on the CMBS side, Highland was able to negotiate a minimum debt yield, maximum loan proceeds, a cap on legal costs, and an extremely competitive rate and term structure.
Jeff Eliason, Principal of Highland Realty Capital, commented: “The Westin Palo Alto is a trophy asset in a world-class destination, and it is controlled by an acclaimed owner/operator of superior-quality hotels. But it was not a slam-dunk assignment given the large dollar size, viewed with extra scrutiny by lenders, the substantial cash out element, and the capital markets turmoil all around. Despite the rocky market, caused by the anticipated risk retention CMBS regulations that took effect in December as well as the election uncertainty, lenders battled to the end to win this choice opportunity. In the final analysis, it was the fortuitous combination of location, property, operating history, and exceptional sponsorship that overcame all of the market anxiety.
About The Westin Palo Alto
The award-winning luxury Property, developed by the Sponsor in 2000, offers excellent amenities including five landscaped courtyards, pool and spa, fitness room, business center, and 7,400 square feet of meeting space. It also includes the well-respected Restaurant Soleil, a full-service restaurant, as well as Luna Lounge for poolside cocktails. The classically-designed hotel, reminiscent of those found in southern France and Italy, is situated on 1.34 acres in the heart of downtown Palo Alto, across from the Stanford campus.
Highland Realty Capital has a strong track record structuring the best possible capital solutions for real estate clients, including: permanent loans, bridge loans, construction loans, mezzanine and preferred equity, JV equity, and asset sales. The principals of Highland have a track record in excess of $5.5 billion in closed transactions involving all property types including: office, apartments, retail, industrial, hospitality, residential subdivisions, condominium developments, storage facilities, and land.