HFF Closes LAX Doubletree Sale and Financing

Umbrella Hotel Group purchased the 216-key hotel in El Segundo, Calif. HFF marketed the property on behalf of the seller and secured a mezzanine loan for the buyer.

DoubleTree by Hilton Hotel LAX - El Segundo
DoubleTree by Hilton Hotel LAX – El Segundo

Umbrella Hotel Group purchased DoubleTree by Hilton Hotel LAX – El Segundo, a 216-key hotel three miles from the Los Angeles International Airport. HFF marketed the property on behalf of the seller, a joint venture between Argosy Real Estate Partners and Evolution Hospitality and secured mezzanine financing for the new owner. Twenty Four Seven Hotels assisted the buyer in the sourcing, underwriting and loan assumption. 

“The process of assuming the debt and placing the new mezzanine financing created an extra layer of complication to the transaction and required a patient buyer with a long-term outlook,” said HFF Managing Director Tony Malk in prepared remarks.  “Umbrella Hotel Group is a unique buyer in today’s hotel market and demonstrated a strong commitment to closing this transaction from the outset.” Malk and Managing Director Scott Hall led the investment sales team representing the seller. The two have also advised on Rubicon’s recent 596-room hotel portfolio disposal one block away.

HFF also arranged a seven-year mezzanine loan with Washington Holdings to match the existing senior loan arranged for the seller in a previous transaction. HFF Senior Managing Director James Fowler led the debt placement team representing the borrower.

“Since the property was encumbered with existing debt subject to heavy pre-payment penalties, the right to place additional mezzanine financing gave the buyer an excellent option, which was significantly accretive to value,” said Fowler in a prepared statement. “HFF had previously represented the seller on the senior financing and was able to negotiate the provision to allow mezzanine financing.”

Full-service property

Located at 1985 E. Grand Ave. on 2.3 acres in El Segundo, Calif., the seven-story property underwent a complete reconfiguration in 2016, which included upgrades to the first-floor public areas and guestrooms. Property amenities of the only full-service hotel in El Segundo include:

  • junior Olympic-sized, heated outdoor pool
  • 3,238 square feet of indoor meeting space
  • 625 square feet of poolside outdoor space
  • fitness center
  • 24-hour business center
  • restaurant

The asset is situated in the South Bay office submarket near interstates 105 and 405 and is surrounded by more than 33 million square feet of office space.

Image courtesy of DoubleTree by Hilton Hotel LAX – El Segundo