Chartiers Lodging Group scored a major refinancing deal for Texas’ largest hotel.
The 1,840-key Sheraton Dallas Hotel received a $270 million mortgage and $30 million in mezzanine financing, according to an S&P Global Ratings report on the securitized loans. Goldman Sachs and JPMorgan originated the loan and packaged it into commercial mortgage-backed securities to be sold off to investors.
The two-year loan has a floating interest rate.
Dallas’ largest hotel opened in 1959 at 400 N. Olive Street as an office building for Southland Life Insurance.
By the 1990s, it was mostly vacant. A $210 million conversion gave the property new life as an Adam’s Mark Hotel. When it opened in 1998, the hotel had 607,000 bookings lined up through 2005, the Wall Street Journal reported.
The property was taken over by Sheraton in 2007.
The hotel underwent a $90 million renovation in 2009 that upgraded guest rooms. The hotel’s lobby, meeting rooms and convention center also got facelifts.
In a 2019 update, the hotel got a rooftop garden and five new food and beverage concepts. The hotel now has 230,000 square feet of meeting space and three onsite restaurants: Draft Sports Bar & Lounge, Open Palette and The Parlor.
Though the property was hit hard by the pandemic, its revenue per available room has since rebounded to surpass pre-pandemic levels, the S&P report noted. The hotel’s 2019 revenue per room was $78.69; in 2023, it was $90.91.
This kind of financing activity speaks to institutional lenders’ faith in Dallas’ hotel market.
Last summer, Dallas-based Crescent Real Estate landed a similar deal to refinance two Uptown hotels. The Ritz Carlton and Hotel Crescent Court got a $300 million CMBS loan, the majority of which was used to retire existing debt on the properties.
Dallas’ record-breaking hotel development pipeline ranks first in the nation, with 193 projects and more than 22,000 units in the works at the end of 2023, according to Lodging Econometrics.
Dallas is expected to open 18 hotels in 2024, second only to New York City, which will welcome 28 projects this year.
