Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has secured two loans approaching $14 million on behalf of Songy Highroads LLC, and the Wardman Group. Songy Highroads is an Atlanta-based real estate investor who recently acquired two hotel properties in Islamorada, one of the Florida Keys’ top destinations.
The Wardman Group is led by Thad Paul, a former Carlyle Group executive and Washington D.C. -based hotel expert.
Berkadia South Florida Senior Managing Director Charles Foschini and Managing Director Chris Apone arranged the financing.
First National Bank of South Miami provided $7.05 million to finance the acquisition of the Days Inn Islamorada Resort, a 37-unit property located about halfway between Miami and Key West.
The same lender also provided $6.8 million for the acquisition of Harbor Lights Islamorada, a similar-sized motel on five acres boasting 600 feet of Atlantic Ocean frontage. Both are five-year, fixed rate-loans, with partial interest only, at an aggressive rate.
“The typical motel in the Florida Keys is a ‘mom and pop’ operator and does not operate with a high degree of efficiency,” explained Foschini. “These motels, however, are in phenomenal locations on the ocean. Working together, Songy Highroads and Wardman recognized that operating the hotels as one will not only provide a more institutional approach to the management of the hotel, but bring a highly amenitized touch to a market starved for a quality experience in an intimate boutique setting. The lender also recognized the underlying value of the assets, and offered loan terms that were not only aggressive, but provided the capital needed to elevate the assets with upgrades, amenities and branding.”
The Days Inn Islamorada Resort is located at 82749 Overseas Highway; Harbor Lights is located slightly further south at 84951 Overseas Highway. Both are located in close proximity to popular attractions including Theatre of the Sea, Long Key State Recreation Park, Treasure Village and several diving and snorkeling sites.
Harbor Lights has been prominently featured in the Netflix hit series “Bloodline,” and maintains a cult following with fans of the show.
Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.
The company is among the top Freddie Mac and Fannie Mae multifamily lenders.
Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.
In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.
The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.
© 2017 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.