Great Wolf Resorts, a company controlled by investment giant Blackstone, completed a $1.55 billion refinancing of nine of its hospitality and entertainment properties known for their indoor water parks.
The refinancing is made up of a $1.3 billion mortgage from a consortium of banks led by Wells Fargo, and a $250 million mezzanine loan from Vici Properties. Wells Fargo is rolling its loan into a new commercial mortgage-backed securities offering.
It is the second major CMBS offering of the year involving Chicago-based Great Wolf. The deals are supported by a rebound in visitors to destination hotels and, in the case of Great Wolf, are attracting visitors in greater numbers.
The collateral for the new loans consists of 4,083 rooms, 575,166 square feet of indoor water park space, 120,242 square feet of outdoor water park space, 59 food and beverage outlets, and 79,680 square feet of meeting space, located across nine states.
The portfolio has experienced a strong resurgence of leisure travelers and property performance four years into the coronavirus pandemic, according to Morningstar DBRS, one of the firms rating the bond offering. Performance levels have now surpassed pre-pandemic levels.
The portfolio reported average occupancy of 81% last year, up from 77.6% at year-end 2019; the average daily room rate at year-end 2023 was $274, up from $241 four years earlier; and revenue per available room was $222 at the end of last year versus $187 at the end of 2019, according to Morningstar.
The $1.3 billion mortgage loan has an initial term of two years, with three, one-year extension options and calls for monthly interest-only payments during the entire loan term at a variable rate.
Vici Properties’ mezzanine loan, made through its Vici Experiential Credit Solutions unit, will have an annual fixed rate and an initial term of two years with three 12-month extension options.
“Through Vici Experiential Credit Solutions, we believe we can successfully recycle and deploy capital at attractive yields and spreads to our cost of capital,” Gabriel Wasserman, chief accounting officer and managing director of Vici Experiential Credit Solutions, said in a statement. “Vici’s ability to provide multiple solutions across the capital stack, including development and mezzanine loans, allows us to invest alongside our partners in sectors experiencing secular tailwinds, as seen with Great Wolf in the indoor waterpark resort industry.”
Since its announcement to partner with Great Wolf to support the development of resorts in 2021, Vici Properties has committed over $720 million in capital to the resorts operator.