Owners of the Hilton Orlando near International Drive have lenders lining up to provide a new mortgage estimated near $475 million, meant to take advantage of low interest rates and potentially fuel future expansion on the property.
The owners have been seeking floating-rate debt with a term of five years, which Eastdil Secured has been marketing since August.
Commercial mortgage-backed securities (CMBS) lenders are the most active bidders for the opportunity in a crowded field, local commercial lending sources told GrowthSpotter. The debt can be compartmentalized as a senior mortgage and mezzanine component.
Much of the new loan value would go to pay down an existing $375 million loan at a floating rate, which the owners sourced in 2014 from UBS and Wells Fargo Bank.
A wave of hotel refinancings across the country this year, driven by low interest rates and availability of debt, are allowing hotel owners to achieve gains on their investments without having to sell their properties.
There is money still available to be financed through CMBS debt for hotel deals worth more than $10 million, particularly in a market like Greater Orlando that is generally forecast for steady growth of RevPAR and occupancy.
In recent years RIDA and its partners have invested in the Hilton Orlando by adding additional meeting space, an outdoor promenade and continuous room renovations.
Their land owner affiliate paid $3.85 million in March for an adjacent six acres, with plans to divert the hotel's stormwater retention and free up more than 2 acres on the Hilton parcel for future development.
An active construction permit has been granted from Orange County for that pond in-fill work, though the hotel's ownership has yet to start the project.
A long-awaited connection of Destination Parkway will activate that property for future development.
The extension of Destination Parkway from Universal Boulevard to Tradeshow Boulevard started construction late last year, and should conclude in April 2018. The new four-lane road will be the last segment to connect International Drive to John Young Parkway.