Millennium Buys Six Ritz-Carltons

NEW YORK— Premier developer Millennium Partners solidified its player position in the luxury lodging tier after closing a $400 million loan to acquire six Ritz-Carlton Hotels in Washington, DC, New York and Boston. Christopher Jeffries, principal and founding partner at Millennium, said finalization of the deal “will allow a major repositioning of Ritz-Carlton on the East Coast of the United States, and therefore, worldwide.” The hotels— two open, four under construction— are The Ritz-Carlton, New York (287 rooms); The Ritz-Carlton, Downtown New York (298 rooms); The Ritz-Carlton, Boston (180 rooms; open); The Ritz-Carlton, Boston Common (191 rooms); The Ritz-Carlton, Washington, DC (300 rooms; open); and The Ritz-Carlton, Georgetown (93 rooms). The properties are operated by The Ritz-Carlton Hotel Co. LLC and owned by MPE Hotel I LLC, an investment vehicle capitalized by the principals of Millennium Partners and two Düsseldorf, Germany, insurance companies: ERGO via its subsidiary Victoria and Provinzial Lebensversicherungsanstalt der Rheinprovinz. The mega-loan was underwritten by Dresdner Bank Real Estate and DePfa Bank. Also participating are: Hamburgische Landesbank-Girozentrale; Landesbank Berlin-Girozentrale; Norddeutsche Landesbank Girozentrale; Deutsche Postbank AG; Investkredit Bank AG; The Royal Bank of Scotland plc; MidFirst Bank, Sovereign Bank and BNP Paribas. Jeffries noted the financing was in the works for four months, driven by the commitment of the lead banks. “We have a very close relationship with Dresdner in particular, having financed over a billion dollars worth of real estate with them over the last several years.” The five-year loan has a one-year extension option and covers approximately 60% of the acquisition costs of the portfolio; The balance is funded by equity capital, according to Matthew Hall at Millennium. Additionally, a $100 million funding guarantee was provided by Marriott International, parent to the Ritz-Carlton brand, to insure the portfolio meets certain cash-flow levels. That loan is expected to be drawn down over two years as construction/renovation of the properties is completed. The Ritz-Carlton Hotel & Towers, Boston Common, part of a $500 million mixed-use project by Millennium Partners, will feature 270 condominiums in two towers, a multiplex theater, 100,000-square-foot SportsClub (L.A., the Reebok Club), 85 rental/extended-stay apartments and 50,000 sf of retail space. The Ritz-Carlton, Georgetown, expected to open by first-quarter 2002, is part of a similar development. In New York, the former St. Moritz on Central Park South will become the $337 million Ritz-Carlton, New York and incorporate 12 condominiums. Meanwhile, the $205 million Ritz-Carlton Hotel & Residences, Downtown will have 122 condominiums. Both are set to open this year. Millennium also renovated the landmark 74-year-old Ritz-Carlton, Boston to be on par with the new properties. Millennium Partners has worked with Ritz-Carlton for three years, driving changes within the traditional chain, and bringing “a little different view on the facility itself,” said Jeffries. “Certainly having a 100,000-square-foot SportsClub as the hotel workout facility is very different from anything Ritz has done before. We’ve made some very significant changes to the typical Ritz-Carlton, those built in the last 20 years…. We’re creating a new image for Ritz-Carlton in the 21st century.” Jeffries said Millennium will only stay at the top of the luxury tier, and only within mixed-use projects where housing improves because it’s part of the hotel and vice versa. “The synergies are not only use synergies, they are economic synergies. We’re proving you can make a lot more money by adding a variety of these mixed uses than simply by having each of the uses on a stand-alone basis,” he said. The company also has two projects incorporating Four Seasons hotels under construction in San Francisco and Miami. “We have no pl