Transaction Details

Loan Amount: $20,500,000
Rate: Low 5’s
Term: Fixed – 5 years
Amortization:30 year amortization
LTC: 65%
DCR: 1.40
Prepayment: Defeasance
Recourse: Non-Recourse
Lender Origination Fee: Par

Transaction Description

Summary:  Continental Partners successfully arranged a $20,500,000 5 year fixed rate loan to refinance the Sheraton Garden Grove. The Sponsor requested a fixed-rate, non-recourse loan to refinance an existing loan and payoff a mezzanine loan. The Hotel has 285 guestrooms within a 186,000 square foot concrete, metal, and steel frame seven-story building. The Hotel offers a first floor lobby bar, lounge and restaurant, a meeting space, business center, fitness room, and an outdoor pool and whirlpool. The Hotel opened mid-July 2008. The Sheraton Hotel site is comprised of 3.131 acres.

Opportunity: Continental Partners approached a number of Lenders with this request including banks, CMBS conduits and life insurance companies. A number of Lenders who quoted the transaction were returning loan amounts that did not meet the Sponsor’s requirement for a mezzanine loan payoff. Most Lenders were sizing to debt yields around 11.5-12% and were skeptical of the asset’s strength based on the 12 months of historical operating statements and the quick ramp-up in NOI.

Result:  Continental Partners effectively sourced a Lender who understood the asset, the market, and the Sponsor’s business plan. The funding Lender lowered its debt yield below 10.5%, allowing for both a loan amount to refinance the existing loan as well as provided enough cash out to pay off the mezzanine loan. Continental also conducted an extensive market survey using a STR Report to confirm the market occupancy, daily rates, and ADR’s for the comparable set. Based on Continental Partners’ survey, the Lender was able to get comfortable with the deal and committed to a larger loan amount than originally requested, meeting all of the Borrower’s objectives.