Transaction Details

Loan Amount: $19,000,000
Rate: 4.98%
Term: 10 years
Amortization: 25 years
LTC: 70%
DCR: 1.30
Prepayment: Yield Maintenance
Recourse: Non-Recourse
Lender Origination Fee: Par

Transaction Description

Summary: Continental Partners successfully arranged a $19,000,000 refinance of a loan secured by the Courtyard Hotel. The Borrower requested a fixed-rate, non-recourse loan to refinance the existing loan and provide substantial cash out. The Courtyard by Marriott is a 195-room select-service hotel offering a leased restaurant, 9,000 square feet of meeting space and an outdoor pool. It was originally built as a Hilton and was followed by an affiliation with Radisson, before becoming franchised as Courtyard by Marriott in 2004. Financing was sized to 68% of value with a 25-year amortization. The 10-year non-recourse loan was priced at 4.98%.

Opportunity: Even though the finance market has come back for commercial properties the market for limited service hotels still is a bit conservative. Most lenders will underwrite a limited service hotel with debt yields between 11-12% based on the T-12 income. A number of lenders who quoted the transaction were coming up with a loan amount that did not meet the Borrower’s requirements of cash out.

Result: Continental Partners approached a number of lenders including banks, CMBS lenders and life insurance companies. Continental Partners was able to find a lender who understood the asset and the Borrower’s business plan. The lender lowered their debt yield below 10.5% in order to get a loan amount to replace the existing loan and provided enough cash out to meet the Borrower’s requirements.