CAI Investments-Sponsored Westin Hotel Securing Bridge Loan
Our investigations reveal that a Westin Hotel, sponsored by CAI Investments LLC, is likely avoiding the April 2024 foreclosure sale that third-party media hypothesized in recent reporting. According to Christopher Beavor, chief executive officer and founder, CAI Investments had gotten all the way through loan documents for a commercial mortgage-backed security refinance with Bank of Montreal – as the original construction loan was due November 2023 – when it decided to change course.
“Due to unprecedented interest rate hikes, [we] elected not to move forward with the loan, in favor of exploring a loan extension, or pursu[ing] a shorter-term bridge loan that did not have the high-cost defeasance of a 10-year CMBS loan,” said Beavor.
Las Vegas-based CAI Investments missed a $5 million loan payment on the Tempe, Ariz., hotel in December 2023 and noted the variety of challenges putting a strain on development markets, i.e., COVID-19, supply chain disruptions, labor shortages, bank failures, inflation, and geopolitical conflicts such as those in Ukraine and Israel.
Hall Structured Finance, which originated the $86.5 million construction loan issued in 2019, filed a notice of trustee sale on the hotel and had said, barring resolution of the outstanding payments or a refinancing, the hotel would be subject to a foreclosure auction on April 24 at the Arizona Supreme Court in downtown Phoenix.
“Navigating these challenges, CAI has since signed a term sheet for a one-year bridge loan with one six-month extension, which is scheduled to close in March 2024. Because of the quality, performance and brand of the hotel, as well as the strength of the sponsor, there were several bridge loan options made available,” Beavor said.
CAI Investments could not disclose the name of the lender at this time.
The 18-story, 290-room Westin, which sits near Seventh Street and Mill Avenue and opened for business in October 2021, is within walking distance of Arizona State University and enjoys views of ASU’s Sun Devil Stadium, as well as Camelback Mountain. The site, which has 21,000 square feet of event space, is home to several dining options and near downtown arenas and entertainment.
Moving forward, CAI Investments told The DI Wire, that the hotel’s profitability is expected to increase by approximately $3 million in 2025 and with the combination of growing profitability, as well as interest rate reductions, the hotel could achieve more than $40 million in value creation over the next 18 months.
“The hotel’s gross revenue are exceeding projections, and the Tempe market is experiencing continued growth. The hotel is truly a ‘Trophy’ institutional asset,” added Beavor.
Headquartered in Las Vegas, CAI Investments is a vertically integrated real estate development company that finances, develops, and manages commercial properties in key markets across the United States.
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