MCR Refinances 16-Hotel Portfolio for $333 Million


MCR Refinances 16-Hotel Portfolio for $333 Million.

February 8, 2024

MCR — the country’s 3rd-largest hotel owner-operator — has refinanced a 16-hotel portfolio for $333 million, generating $51 million of net proceeds.

In less than three years, MCR doubled the portfolio’s net operating income, increasing it from $15 million at acquisition to $36 million. This represents a 9.4% cap rate on MCR’s cost basis in the hotels.

The remarkable growth is a result of MCR’s data-driven and detail-oriented approach to hotel ownership: MCR measures 112 items for each of its 150 hotels every day, streamlining operations and ensuring every hotel delivers a consistent, enjoyable experience for guests.

“Securing a refinancing in today’s challenging debt environment demonstrates MCR’s success as an owner-operator,” says Tyler Morse, Chairman and CEO of MCR. “We bought good hotels at the right time, in the right markets, and implemented our business strategies to boost operating performance.”

MCR acquired the 16 hotels — totaling 2,274 guestrooms — primarily in 2020 and 2021. Spread across 11 states, the portfolio is concentrated in high-growth markets, including Texas, North Carolina, Florida and Arizona. The portfolio is comprised of 11 Hilton and Marriott extended stay and select service brands, including Home2 Suites by Hilton, Hilton Garden Inn, DoubleTree by Hilton, Hampton by Hilton, Residence Inn by Marriott and Courtyard by Marriott.

The loan was securitized in a floating-rate single asset, single borrower (“SASB”) CMBS transaction. The new financing replaces the original debt with an outstanding balance of $268 million at the time of payoff.

Deutsche Bank Securities and BMO Capital Markets acted as Co-Lead Managers and Joint Book Runners on the transaction. Eastdil Secured LLC served as exclusive advisor to MCR on the transaction and Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor.