Square Mile, Blackstone Purchase Hotel Mortgages From FDIC

A multi-million dollar deal was announced today as the Blackstone Group LP (BX) and Square Mile Capital Management LLCC real estate investment firm completed the purchase of hotel mortgages from the U.S. Federal Deposit Insurance Corp. for $385 million.

 

The mortgages were previously held by the Silverton Bank, and are backed by 45 lodging properties, according to Square Mile in a statement released today. The bank, based in Atlanta, was seized by the FDIC and closed down in 2009.

Hotel sales are being given a significant boost by the economic recovery, and are set to jump by around 25% in 2011, according to the hotel investment-services unit at Jones LaSalle. In the first two months of this year, revenue per available room (or “revpar”) in the biggest 25 markets in the U.S. increased from $62.90 to $68.89, said the Smith Travel Research Inc based in Tennessee.

 

“Right now hotels are a very attractive investment due to the sharp decline in prices” says Jonathan Gray, Blackstone’s senior managing director said in a November conference in New York. “We are currently deploying a lot of capital into hotels”.

Most of the ex-Silverton portfolio loans will be serviced by Square Mile, the company said in a statement today. “Most are performing well with owners in all cases meeting their debt obligations” they said. Neither Square Mile nor Blackstone would disclose the price that was paid for the Silverton portfolio.

 

Yesterday’s purchase represents the second time that Square Mile have acquired hotel loans from the Silverton Bank which were seized by the FDIC, according to the property investors. Previously, in May 2010, they purchased a 40% stake in a 57 lodging property-backed Silverton portfolio.