Carlton Arranges $324M Recapitalization for Four Seasons Hotel Milan

Carlton Group has orchestrated a $324 million financing package deal for the Four Seasons Hotel Milan in Italy for the recapitalization of the 118-room luxury hotel and a discounted loan payoff.

Carlton Group has orchestrated quite a deal for the Four Seasons Hotel Milan in Italy. Acting on behalf of international real estate holding company Statuto Group, the real estate investment banking firm closed an approximately $324 million financing package consisting of the recapitalization of the 118-room luxury hotel and a discounted loan payoff.

It’s a high-profile transaction for a high-profile property. Housed in a restored former 15th-century convent in Milan’s Montenapoleone district, the Four Season’s Milan made a big splash on the international real estate radar in 2006, when Statuto purchased the asset from Quinlan Private in a $242 million deal that set a world record for the largest hotel transaction in terms of price per room.

Six years later, Four Seasons Milan is turning heads again with the completion of its recapitalization in what is presently a highly challenging capital markets environment in Europe. Undaunted, Carlton persevered for six months and ultimately succeeded in securing a London-based money manager to provide the capital and facilitate Statuto’s purchase of its loan from the financial institution holding the debt on hotel.  The end result: Statuto remains owner of Four Seasons Milan, having addressed financing issues without adding new equity investors.

It was no simple feat, but there may be more such deals to come. “This transaction is a precursor to other discounted loan payoffs which will inevitably occur, now that financial institutions with European exposure look to monetize underwater loans,” said Howard L. Michaels, chairman of Carlton in a prepared statement.

According to a third-quarter report by Prudential Real Estate Investors, European banks are still holding approximately 10 percent of their loan books against commercial real estate, and thereby, “remain at risk from the deteriorating economic outlook.”