Blackstone’s Great Wolf Resorts Lines Up $1 Billion Refinancing in Sign of Travel Rebound

Published by: Mark Heschmeyer/CoStar News
Published date: February 2024

Great Wolf Resorts, a company controlled by investment giant Blackstone, has arranged a roughly $1 billion partial refinancing of 14 hospitality and entertainment properties known for their indoor water parks.

The deal illustrates how U.S. destination hotels have rebounded from the effects of the pandemic and, in the case of Great Wolf, are attracting visitors in greater numbers.

A group of banks led by JPMorgan Chase agreed last week to provide a floating-rate, interest-only loan backed by eight resort properties located across seven states, according to a filing with the Securities and Exchange Commission. The commercial mortgage-backed securities offering is preliminary, and the filing didn’t include a total amount for the two-year loan, financing that is to have three one-year extension options.

The debt will be used to repay a portion of a $1.7 billion CMBS loan on a portfolio of 14 properties that JPMorgan and other banks originated in 2019. That loan was recently extended to mature in December this year.

Six of the eight Great Wolf properties to be refinanced are expected to include resorts in Williamsburg, Virginia; Fitchburg, Massachusetts; Mason and Sandusky, Ohio; Wisconsin Dells, Wisconsin; and Minneapolis.

Chicago-based Great Wolf, in an email to CoStar News, valued the financing amount at about $1 billion.

In the past year, the hotel industry has shown further recovery from the extent of economic damage caused by the pandemic. On an annual basis, hotel room rates were up 3%, and revenue per available room was up 1% with leisure travel leading the way, according to Bank of America Securities, which tracks hotel loan performance.

Popular vacation destinations are starting to see a return to more normal visitor levels, the bank said in its latest report. It made note of somewhat lighter foot traffic since the start of the year, but overall issued a positive forecast.

“Looking ahead, we think hotel performance will remain tethered to the fate of the broader economy,” the bank said. “To the extent employment and consumer spending remain strong, we would expect hotel fundamentals to remain stable.”

Considered destination resorts, the Great Wolf hotels bounced back strongly from closings and traveler reluctance following the declaration of the pandemic nearly four years ago. The total 14 properties backing the current loan were performing above their 2019 loan securitization levels by April 2023, according to bond-rating firm KBRA.

The 14 properties posted net operating income of $244.5 million for the 12 months between October 2022 through September 2023, according to the latest monthly CMBS bondholder report. That is up from $196.3 million in the same 12 months a year earlier, and up from $151.3 million in the period before the pandemic.

Blackstone acquired a 65% controlling interest in Great Wolf from Centerbridge Partners in 2019 at a $2.9 billion valuation.