INVESTMENT OPPORTUNITY - Jones Lang LaSalle ("JLL") and Ten-X have been retained on an exclusive basis by the Seller, a CMBS special servicer, to arrange the sale of a $5.3 million non-performing loan (the "Loan"). The Loan was originated in January 2018 with an initial balance of $5,500,000 to refinance existing debt and is secured by a first-lien priority deed-of-trust on the fee simple interest in a 15-key luxury boutique hotel (the "Collateral" or "Property"), in the Georgetown neighborhood of Washington, D.C. The Loan was structured with a fixed interest rate of 4.931% and P&I payments based on a 30-year amortization schedule through the term, which expires in January 2028.
The Loan was transferred into special servicing in April 2020 for imminent default from a reduction in demand at the Collateral due to local COVID-19 restrictions and national lockdowns. The servicer filed a foreclosure complaint in February 2021. As of September 2021, the Loan is 120+ days delinquent with the current principal balance of $5,324,515.
COLLATERAL - The Property is a one-of-a-kind, limited-service luxury boutique hotel in Georgetown, a prevailing submarket of Washington, D.C. The Property is comprised of a single-parcel lot totaling 0.13 acres. The two-story hotel opened to the public in 2016 and features 15 rooms, a lounge area, and an outdoor patio. The Property was completely rehabilitated and converted under current ownership and includes necessary back-of-the-house space, including an in-house laundry facility.
Transaction Auction Dates & Documents
Auction Start Date: Monday, December 13, 2021
Auction End Date: Wednesday, December 15, 2021
POSITIVE GUEST REVIEWS - Of the 443 reviews gathered on Tripadvisor since summer 2016, 93.2% rated their stay at the Property as “Very Good” or “Excellent.” The Property is truly a one-of-a-kind experience found in Georgetown.
COVID AFFECTED - Intended to stop the spread of COVID-19, national lockdowns catalyzed a falling occupancy due to a reduction in leisure travel demand domestically. With the Sponsor unwilling to fund debt, the Loan defaulted in April 2020 directly due to COVID-19.
ACCELERATED TIMELINE - By the Servicer filing a foreclosure complaint in February 2021, an investor has an accelerated path to the fee simple interest either through foreclosure or a potential deed-in-lieu.
HIGH BARRIERS TO ENTRY - After centuries located at the heart of the nation’s capital, the real estate market in Georgetown is widely developed. The lack of pure-play developable land within the submarket pushes a price benefit to the current residential and alternative use product supply.
ATTRACTIVE BASIS - At $5,324,515 in outstanding principal balance, the Loan sits at a healthy and attractive basis for $354,968 per unit, below replacement cost.