HKB secures $73.5M in financing for 7 hotels

The refinance includes six Hyatt Place hotels across the US and a Best Western Plus in Florida.

NATIONAL REPORT — HKB Hotels Group, the hotel management company of Atlanta-based HKB Investments Group, has secured $73.5 million in a CMBS refinance loan, which includes $59 million in portfolio refinancing for six Hyatt Places hotels in Alpharetta, Georgia; Charlotte; Dallas; Greenville, South Carolina; Roanoke, Virginia; and Topeka, Kansas.

The financing also includes a $14.5 million refinance for the Best Western Plus Aku Tiki in Daytona Beach, Florida. Chicago-based Mag Mile Capital arranged the transaction.

The proceeds of the $73.5 million in financing were used to repay a high-interest bridge loan that had been used to acquire the assets initially. Both transactions feature five-year interest-only payments.

HKB Investments Group originally purchased the Hyatt Place assets in 2022 while they were in receivership. Mag Mile Capital also arranged the acquisition bridge and the renovation loan at the time.

HKB implemented its business plan by investing close to $30 million in capital expenditures across the six Hyatt Place hotels, bringing the company’s total investment in the assets to over $90 million. This new financing will enable HKB to reduce its interest rate by over 3% per year and provide additional capital for renovating some of the lobbies and completing remaining capital improvements for the Hyatt portfolio.

HKB’s Best Western Plus at Daytona Beach also recently underwent extensive renovations following hurricane damage, which included a new seawall at the back of the hotel.

Mag Mile stated that the biggest challenge in closing the CMBS loan was that the Best Western Plus had an operational gap in its trailing 12 months of historic performance (due to hurricane damage and a fire), but it was able to underwrite a full 12 months of cash flow using aggressive assumptions.