Transaction Details

Loan Amount: $75,900,000
Rate: L + 400
Term: 30 months
Amortization: Interest – Only
LTC: 90%
DCR: 0.52x In, 1.15x Out
Prepayment: 18 Months of Yield Maintenance
Recourse: Non-Recourse
Lender Origination Fee: 1%

Transaction Description

Summary: Continental Partners successfully arranged a $75,900,000 bridge loan secured by a hotel portfolio consisting of three hotels totaling 153 rooms located in San Francisco, CA. The Sponsors requested a highly leveraged, nonrecourse bridge loan to acquire the hotel portfolio. The loan was secured by two promissory notes executed by the Sponsors in favor of the Lender. The entirety of this 30 month loan was interest only. From start to finish, the transaction closed in under 54 days.

Opportunity:  A number of Lenders quoting the transaction offered a loan amount which required the Sponsor to put in a large portion of their liquidity at the close of escrow. The bidding Lenders were concerned the hotels were boutique in nature; consequently, they did not have a flag or reservation system to book hotel rooms. Continental Partners approached numerous financial institutions including banks, CMBS Lenders and life insurance companies. Continental Partners was able to identify a Lender who, after reviewing the detailed package provided by Continental Partners, was willing to fund 90% of the cost with a bridge loan to meet the Borrower’s requirements. Because Continental Partners went the extra mile to find the appropriate Lender the Sponsor did not have to bring in an equity partner to complete the acquisition.

Result: Continental Partners completed an exhaustive market survey confirming hotel occupancies, ADR and Rev Par to validate the higher loan-to-value. Based on an understanding of the Sponsor’s business plan, the asset and the location strength the Lender was able to commit to a higher loan amount to meet the Sponsor’s objective. The Lender agreed to $7,400,000 of interest reserves, which allowed the property to float through the renovation period. There was a 12 month earn-out period from the time of loan closing where the Borrower could tap into additional proceeds totaling $10,980,000, which was structured as capital expenditure reimbursement based on a Lender approved budget. Continental Partners was able to leverage its relationships with these Lenders by having them reduce the debt service coverage below the minimum required in the loan application to 0.52x, in order to fund a total loan amount to meet the loan request.