SOUTHLAKE, Texas – A new Westin hotel is set to rise in North Texas, highlighting a growing financing trend: the ground-sale leaseback, according to CBRE.
The ground-sale leaseback model is gaining traction because it reduces the equity required from developers and hotel operators, freeing capital and improving project viability.
SRH Hospitality, led by Jerry Crenshaw, will develop the 261-room Westin Southlake near Highway 114 and Southlake Town Square. CBRE executives Nate Sahn, Robert Brennan, and Pravin Boteju negotiated the transaction.
CBRE has completed multiple ground-sale leaseback transactions in the past four years. This structure applies to acquisitions, dispositions, refinancing and development, and it provides several advantages for hoteliers looking to restructure their capital stacks and boost cash-on-cash returns.
“Many commercial real estate principals across hotel, office, retail, multifamily and industrial sectors are recognizing the benefits of this structure, which combines significantly lower equity requirements with higher cash-on-cash returns and reduced overall risk compared with traditional investment models,” said Robert Brennan, Senior Vice President at CBRE.
“Ground-sale leasebacks, also called bifurcations, are increasingly attractive as a capital stack solution. As momentum builds, more buyers, sellers, developers and owners will pursue these financings, refinancings and recapitalizations,” added Nate Sahn, Executive Vice President at CBRE.
For the Westin Southlake project, a Florida hedge fund owns the land. The six-story hotel will occupy 6.8 acres less than five miles northwest of Dallas/Fort Worth International Airport and will include a 25,000-square-foot conference center.
Nov. 4, 2019 Realty News Report Copyright 2019
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