Transaction Details

Loan Amount: $54,000,000
Rate: 5.55%
Term: 10 Years
Amortization: 30 Years Thereafter
LTC: 70%
DCR: 1.30
Prepayment: Defeasance
Recourse: Non-Recourse
Lender Origination Fee: Par

Transaction Description

Summary: Continental Partners successfully arranged a $54,000,000 refinance secured by a hotel portfolio consisting of three hotels totaling 303 rooms located in San Francisco, CA. The Sponsor requested a fixed-rate, non-recourse loan to refinance the existing recourse bank loans and provide substantial cash out proceeds. Amenities at the hotel include a fitness center, indoor swimming pool, business center, guest laundry, gift shop, restaurant, lounge and approximately 9,000 sqft of meeting space.

Opportunity: A number of Lenders quoting the transaction offered a loan amount requiring the Sponsor to fund additional equity at close in order to take out the existing loan balances. The bidding Lenders were concerned the hotels were boutique in nature because the hotels 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 source a Lender willing to structure a loan at 66% loan-to-value to meet the Borrower’s requirements. Most Lenders were sizing to a debt yield around 10.5%, were skeptical of the Sponsor’s underwriting since it was based on only 12 months of historical operating statements and the extremely quick ramp up in NOI.

Result: Continental Partners was able to find a Lender who understood the asset, the market and the Sponsor’s business plan. The Lender lowered their debt yield below 10.25%, which allowed for a higher loan amount to replace the existing loans and provided enough cash out to meet the Sponsor’s requirement. Continental Partners completed a meticulous market survey using the STR report to confirm market occupancy, daily rates and ADR’s for the comp set. Based on the Continental Partners survey, the Lender was able to get comfortable with the deal and committed to a larger loan amount than originally requested.