Dealmaker: Sunstone Hotel Investors Refinances Hilton San Diego Bayfront

Sunstone Hotel Investors, Aliso Viejo, Calif., refinanced the Hilton San Diego Bayfront in California with a new $220 million mortgage.

The real estate investment trust’s new three-year loan included three one-year extension options. The interest-only loan floats at LIBOR plus 1.05 percent with a 25 basis point increase during the final one-year extension period, if extended.

Sunstone said the refi will lower its annual interest expense by nearly $2.6 million. The new financing replaces an existing loan at LIBOR plus 2.25 percent that had been scheduled to mature in August 2019.

The 1,190-room Hilton San Diego Bayfront is owned by a joint venture between Sunstone and real estate investment trust Park Hotels & Resorts Inc., McLean, Va. Sunstone owns a 75 percent interest in the joint venture.

Sunstone also completed two other transactions, acquiring the Ocean’s Edge Hotel and Marina in Key West, Fla. and selling the Marriott Park City in Park City, Utah. It acquired the fee-simple interest in the 175-room Ocean’s Edge Hotel & Marina for $175 million and sold the 199-room Marriott Park City for $27.6 million.

Sunstone President and CEO John Arabia said the REIT’s Ocean’s Edge Hotel & Marina acquisition is part of its strategy to recycle capital into higher-quality long-term assets. “The Ocean’s Edge Hotel & Marina is a brand new, purpose-built hotel and marina that is of significantly higher quality than the majority of the Key West hotel supply,” he said, noting the resort and marina–which opened in January–should provide “meaningful” near-term growth as it reaches stabilization and longer-term growth due to Key West’s market supply restrictions.