Lotus Capital Partners has arranged a $130 million financing package on behalf of a joint venture between Gencom and Mohari Hospitality for the development of Nekajui, a planned Ritz-Carlton Reserve Hotel and Residences in Costa Rica.
Banco BCT, a local bank in Costa Rica, funded the senior loan via a three-bank syndicate, while Monroe Capital originated the mezzanine tranche. The sponsors will use the financing to develop The Ritz, which is part of a 1,400-acre master planned resort community on Costa Rica’s northern Pacific coast. It is a region that is seeing substantial activity from North American tourists, said Faisal Ashraf, managing partner of Lotus.
The financing is the second that Lotus, a New York-based advisory, has arranged for a luxury development in Costa Rica. It comes on the heels of a $191 million floating-rate financing package funded by Blackstone on the Four Seasons Resort and Hyatt Andaz that closed in late August.
One difference between the Nekajui financing and the Four Seasons deal is that Nekajui is a ground-up construction, which Ashraf noted is extremely rare given the turbulence in the capital market for what is perceived to be harder capital to source. The other differentiating feature of the Ritz financing was the nature of the capital structure. “It is rare to have a capital structure consist of senior loans sourced from local banking and mezzanine capital raised from the US markets,” he said. “The challenges were many but the solutions were more.”
The factor that draws both deals together, however, is the quality of the project and sponsorship. While it is challenging to raise hospitality financing in today’s capital markets in the US, this transaction demonstrates that there is financing for high-quality projects backed by institutional sponsors with unique use propositions. “It is slated to be one of the most luxurious resort travel destinations in the Americas,” he added.
Lotus specializes in complex financing assignments for institutional clients, with Ashraf noting there were significant headwinds to arranging a large construction financing at a time of broader economic volatility. It is also rare for US capital to be allocated to development financing in the region, he added.
When completed, the property will comprise a boutique resort and branded residences, with 107 guest rooms and 36 homes. The property’s residences are more than 70 percent pre-sold, accounting for about $180 million of total sales.