Berkadia refinances downtown Boise hotel construction loans

A Berkshire Hathaway entity has assembled long-term, fixed rate financing to pay off construction costs of two hotels in downtown Boise that are roughly a year old.

Berkadia, a joint venture of Berkshire Hathaway and Jefferies Financial Group, on Oct. 25 announced $30.5 million financing for the 185-room Marriott Residence Inn Boise Downtown/City Center at Capitol Boulevard and Myrtle Street.

Hotel developer and owner Eagle-based Pennbridge Lodging has always declined to discuss construction costs for the hotel that opened in November 2017. The Residence Inn is the largest of about 40 hotels built in Idaho in the past three years.

In July, Berkadia’s Phoenix office had also secured $16.2 million financing for the 150-room Hyatt Place that opened in May 2017 at 11th and Bannock streets.

“Boise is a really interesting market for the size of the market,” said Adrienne Kautzman, director of Berkadia’s hotels and hospitality team. “The reason these investors are interested in Boise is the diversity of the demand with the university, medical, government, tech and ag. The diversity keeps the demand stable and the demand is growing.”

Deals financed by two different lenders on each asset transition the Residence Inn and Hyatt Place loans from floating rate recourse loans to long-term, fixed-rate non-recourse financing, Kautzman said.

“The financing allowed Pennbridge (and Hyatt Place developers Utah-based PEG Development and Idaho-based Rafanelli and Nahas) to benefit from Berkadia’s lending relationships and knowledge of the hospitality finance market to reduce long-term capital costs and drive higher returns to their investors,” Kautzman said.