Crescent Lands $300M Financing for Uptown Dallas Hotels

Crescent Real Estate scored a major refinancing deal for two of the top hotels in Dallas.

The Ritz-Carlton Dallas and Hotel Crescent Court received a $245.8 million mortgage and $54.3 million in mezzanine financing, according to a DBRS Morningstar report on the securitized loans. Goldman Sachs originated the loans and packaged them into commercial mortgage-backed securities.

Some $268 million of the loans will be used to retire $268 million of existing debt on the properties. The funding will also return $13.2 million in equity to Crescent, cover closing costs and fund reserves at the hotels.

The two-year loan has an interest rate based on the secured overnight financing rate plus 3.15 percent. But, the borrower was required to buy a rate cap, capping its total interest rate at 8.15 percent. As of yesterday, SOFR was 5.31 percent, meaning Crescent has already hit the cap.

Both hotels are in Uptown, one of the hottest neighborhoods for new development in Dallas. But they also significantly predate the latest momentum for the neighborhood.

The Ritz-Carlton Dallas is a 218-key property opened in 2007 at 2121 McKinney Avenue. At the end of March, it was 76 percent occupied, down slightly from 82 percent occupancy before the pandemic. However, it is almost done with a $20 million renovation to all of its rooms. Crescent spent almost $13 million upgrading the amenity spaces and common areas between 2017 and 2022.

Hotel Crescent Court at 400 Crescent Court opened in 1985, and it recently underwent $32 million in renovations. The 226-key hotel is particularly popular in pro sports — 31 NHL teams will be traveling to play in Dallas this year, and all but three are staying there, hotel management told Morningstar. Occupancy stands at 77 percent, four percentage points shy of pre pandemic level.

Together, the hotels had an average revenue of $338.65 per available room, up from pre-pandemic RevPAR of $292.42. Morningstar called them “top performers in their competitive set.” They will face some new competition, with JW Marriott Dallas Arts District and Hotel Swexan set to bring around 415 luxury rooms to the market this year.

Crescent was founded by John Goff, a Fort Worth investor who sold the firm to Morgan Stanley for $6.5 billion in 2007, according to Forbes. After the market crash, Goff partnered with Barclays to buy the firm back at a discount. He now chairs Crescent, which controls a portfolio worth about $4.4 billion and covering nearly 4,200 hotel keys.