Blackstone nears $950M refi on Hotel del Coronado in San Diego

Barclays leading CMBS deal on 1880s hotel

Blackstone is nearing a $950 million deal to refinance its historic Hotel del Coronado in San Diego, The Real Deal has learned. 

Barclays is leading a commercial mortgage-backed securities package that will be backed solely by the 757-key hotel, located at 1500 Orange Avenue, according to data from Trepp and a source familiar with the matter. Blackstone declined to comment. 

The floating-rate, interest-only loan, which is expected to close later this month, is about 60 percent loan-to-value, according to Trepp, meaning the property is valued at about $1.6 billion. 

“It is such an iconic building,” Alan Reay, who runs hotel brokerage Atlas Hospitality Group, said of the hotel. “It’s impossible to duplicate or rebuild.”

Blackstone bought the 134-year-old Hotel del Coronado, which sits on the southern end of San Diego’s Coronado peninsula, in 2015 as part of a larger $6 billion acquisition of Strategic Hotels and Resorts. Blackstone paid $600 million for the property, according to records. 

A year later, Blackstone had struck a deal to sell off the Hotel del Coronado — and the entire Strategic portfolio — to Anbang Insurance Group. However, U.S. regulators blocked the deal, prompting Blackstone to cancel the sale. 

In September, the investment firm completed a $400 million renovation of the property, adding 75 more rooms. 

The new financing will replace $508 million in senior mortgage debt and $204.4 million held across three mezzanine loans — all of which were issued in 2017, according to ratings reports from DBRS Morningstar.

That debt, packaged as a CMBS loan, was set to expire in August, after Blackstone had requested four extensions. 

At the end of 2022, the property reported net operating income of about $68 million, according to CMBS data obtained by TRD, an almost 50 percent increase from 2019. 

Hotels in resort markets, like Coronado, La Jolla and Santa Barbara, have set record numbers in the last two years, after travel restrictions related to the pandemic eased, according to Reay. 

Blackstone has also significantly upped the average room rates at the property. Average revenue per room at the hotel was $507 per day at the end of last year, CMBS data shows, up from $272 at the end of 2014.