February 15, 2017
George Smith Partners arranged a $2,700,000 cash-out refinance bridge loan on an unflagged boutique hotel in Sacramento, California. The Borrower approached GSP seeking a financing solution from a lender that could close quickly, provide capital to renovate, and bridge until stabilization. GSP identified a lender who was comfortable lending on an unflagged hotel in the middle of renovations and located in a secondary market. During due diligence, an unpaid occupancy tax from the prior owner was discovered. With the prior ownership unable to pay the tax, the county placed a lien against the property, even though it was under new ownership with no relation to the prior owners. This created a setback for closing, as title could not be cleared until the tax, interest, and fees were paid in full. The borrower weighed the cost of litigating to fight the liens, but chose to pay off the liens which allowed the lender to close on time. Sized to 50% of cost, the interest only loan has an 18 month term to allow for full stabilization of the property and has no prepayment penalty. The loan is priced at 7.90% for the first twelve months and 8.30% thereafter, for the remainder of the term.
October 22, 2015
Transaction Description: George Smith Partners arranged the $4,950,000 refinance of a 72 key limited service hotel in Central California. The borrower built the subject property in 2002 and was seeking new debt to replace his higher yielding coupon, yet requested a loan that would allow for future flexibility. There was a small return of equity funded through this refinance. Located in a high barrier to entry, the subject is surrounded by an abundance of walkable retail and restaurants. GSP identified a portfolio capital provider who understands hospitality and was comfortable with the historically consistent cash flow despite the secondary location. Fixed for five years at 3.85% before floating over Prime for the remaining two years, the 25 year amortized loan steps-down from 5%.
September 17, 2015
Transaction Description: George Smith Partners arranged financing that was structured with three credit facilities for the reposition refinance of an un-flagged hotel. The first credit facility was a recorded First Trust Deed that of $3,500,000 to satisfy the existing lienholder and cover additional partnership debt. Trailing cash flow history required the recordation of a Second Trust Deed from the same capital provider that funded $1,125,000 into a rehabilitation fund for capital upgrades. Additional funds were required to complete the Sponsor’s rehab plan so an unrecorded revolving working capital line for $375,000 was drafted to complete the capital project. Sized to 55% of value, recorded loan proceeds were limited by historical cash flow. The recourse loans are floating over Prime less 0.25% with a 3.75% floor for the 10 year term. The loan may be fixed via a SWAP vehicle at any time during the loan term. There is no prepayment penalty while the loan floats. The credit line revolver is priced at Prime plus 0.5% paid on balances as drawn for the two year term.
Rate: Prime minus 0.25%
Term: 10 Years
Amort: 25 Years
- Advisors: Private: Jesse Cruz
September 17, 2015
Transaction Description: George Smith Partners arranged construction financing for a 99-Room Hampton Inn Limited Service Hotel in the heart of Coastal California Wine Country. Uniquely situated off of Highway 101, our Sponsor purchased the land mid-2014 within a short drive of 60 operating vineyards. Set to open mid-2016, the hotel will feature a contemporary ranch design with wooden roofs and awnings. Guest rooms will feature refrigerators, microwaves, free high speed internet and 32” HDTV with free movie channels. Our Sponsor is an experienced hotel developer and owner, having built 9 hotels ground-up and performing major renovations on several others. GSP identified a non-bank lending source able to provide non-recourse, high leverage construction financing. Funded loan proceeds increased during the application process as construction costs were being finalized. Sized to 80% of costs and priced at LIBOR + 7.5%, the three year term offers 2 – one year extensions.
November 25, 2014
Transaction Description: Malcolm Davies successfully placed the 70% of cost financing for the development of a newly branded Southern California luxury hotel, subject to a 99 year ground lease. The Non-Recourse debt allowed the Sponsor to break ground on a project that had been in the works for many years. Terms of the Non-Recourse construction loan are confidential.
Challenge: Leasehold ownership is secured with a 99-year ground lease to a private land owner. The Developer required a Non-Recourse structure in a capital market that is now only reviewing hospitality construction. Over 50% of the hotel’s revenue will be generated from Food & Beverage.
Solution: GSP was able to underwrite the true value of the ground lease to articulate the gross lease payments were below the actual cost of what the land acquisition would have been to the project, ie it was less expensive to lease the land rather than acquire in an arms-length transaction. GSP sourced a lender who has extensive knowledge in the luxury hospitality market and was comfortable to provide the Non-Recourse financing. With a large F & B allocation, GSP documented like kind hotels in the market to assure that the project’s figures were indeed inline to the performance of the hotel.
- Advisors: Malcolm Davies
October 1, 2014
Transaction Description: GSP placed the senior construction loan for a mid & luxury dual-branded high rise hotel. The 332 Room Hotel (188 Room Luxury Hotel & 148 Room Mid-level Hotel) is located in a primary California market. Floating over LIBOR with a 5.25% floor, the 51.5% of cost loan carries a 3½ year term allowing time for construction and stabilization prior to the need for options. Challenge: The project was entitled & construction drawings had been completed prior to the ’08 recession. The sponsor had been unable to secure the financing for a variety of reasons prior to hiring GSP. Solution: GSP secured a lender that had significant expertise in Type I hospitality construction and is knowledgeable of the hotel flag’s management company. GSP was involved throughout the process for the negotiation and execution of the management agreement and the selection of the GC and GMP/ GMAX construction contract; both vital to securing the construction facility. Upon contract executions, GSP utilized it’s expertise to prove the strength of the hotel and hotel brand’s with out-of-market and in-market performance data. This process assured the lender that the project is feasible from a cost, revenue & valuation perspective. Rate: 30 Day LIBOR + 400 w/5.25% Floor Term: 42 Months w/two – 12 Month Extension Options LTC: 51.5% Lender Fee: 1% Advisors: Malcolm Davies, Murtuza Razavi
September 20, 2014
Transaction Description: GSP successfully placed the $34,000,000 senior loan for the cash out refinance of a premier hotel in the heart of Silicon Valley. The hotel is a contemporary, boutique style hotel with modern architecture, unique technical aspects, and an atmosphere that encourages socialization. The hotel was designed as LEED Silver and has pioneered several cutting edge technology features. Challenge: The Sponsors were refinancing to pay off the bridge loan and requested a return of equity on an asset that was just recently stabilized. They needed to close within 30 days to avoid the extension fees on their bridge loan. Solution: Working closely with GSP, the lender accelerated the reports and closed in 30 days. Rate: Treasuries + 178 Term: 10 Years Amort: 3 Years IO; 30 Years Thereafter LTV: 70% Non-recourse Lender Fee: Par Advisors: Steve Bram, David R. Pascale, Jr., Paul Monsen
July 3, 2014
7 – 2 – 2014
Transaction Description:GSP successfully placed the cash-out refinance of a boutique hotel in a tertiary Southern California market. The $11,750,000 loan on the boutique, lifestyle oriented hotel returned over $5,000,000 of equity to the owner for this seasonal operating hospitality asset. The proceeds were 70% of the appraised asset value. Underwritten to a 10% debt yield, the non-recourse five year term is fixed at 4.59% with one year of interest only and 30 year amortization thereafter. Rate: 4.59% Term: 5 Years Amort: 1 Year IO; 30 Years Thereafter LTV: 70% Non-recourse Lender Fee: Par Advisors: Malcolm Davies, Murtuza Rasavi
June 12, 2014
6 – 11 – 2014
Transaction Description: GSP successfully placed a high leverage non-recourse loan on a large ageing California resort. The bridge loan provides the Sponsor three years to execute a business plan that includes entitling the resort in part for a higher and better use. $59,600,000 of the on-book financing was funded at closing, with the remaining $2,600,000 to be future funded for property improvements. Interest will not be paid on the future funding until disbursement. The initial funding is subject to an 8.5% minimum debt yield. The interest rate floats at L + 4.80% for the three year term with a 4.95% coupon floor; Sponsor purchased a two-year rate cap at closing with a required renewal in the third year. Rate: LIBOR+4.80%; 4.95% Floor Term: 3 Years + two 12-Month Exts Amort: Interest Only Prepayment: 1,1, Open Non-recourse Lender Fee: 1.0% Advisors: Gary E. Mozer, Katie Rodd, Michael Anderson
May 14, 2014
5 – 14 – 2014 Transaction Description: GSP successfully placed the non-recourse refinance of a 90 unit limited-service hotel in a tertiary market of California. The MSA has a population of less than 360,000 people. The subject property had 8 years remaining on the franchise at the time funding. Fixed at 4.82% for five years, the loan amortizes over 25 years and was sized to 70% of appraised value. Challenge: The subject property was built in 2007 as an independent limited-service boutique hotel and later flagged with another limited-service brand in 2008. Despite franchising, the property went through significant turmoil during the recession. The existing loan was on a loan modification agreement with substantial back owed interest and delinquent property taxes. The note had reached maturity and there were no options for an extension. The borrower’s global cash flow would not support this asset and precluded many portfolio lenders from entertaining the loan request. Solution: GSP identified an aggressive lender that recognized the significant turnaround in the last two years of operation as a result of franchise change to Holiday Inn Express and accepted the borrower efforts their attempt to bring back-owed interest and property taxes current. Global cash flow concern was mitigated by demonstrating the owner’s pride of ownership and significant cash equity into this transaction. These metrics allowed the lender to see beyond the credit quality of the borrower and allow the subject property to outweigh peripheral circumstances. By engaging George Smith Partners, the borrower protected millions in cash equity invested in the property by avoiding a term maturity default and possible foreclosure all while achieving favorable pricing and leverage. Rate: 4.82% Fixed Term: 5 Years Amort: 25 Years Non-recourse Lender Fee: Par Advisor: Ameet Chagan
May 8, 2014
5 – 7 – 2014 David Stepanchak and Loren Bedolla successfully structured and placed the 75% LTV non-recourse bridge refinance of two limited service hotels. The loan is secured by two flagged Atlanta hotels with 254 total keys. During the economic downturn, hospitality struggled nationally and has only started their recovery over the last two years. GSP targeted a capital provider who was not only knowledgeable about the location and marketplace, but also comfortable with the month-over-month improving performance of both assets and the Sponsor’s operating experience. Both hotels outperformed cash flow expectations during the underwriting process and allowed for an increase in the actual funded loan. GSP vetted the business risk exposure upfront with the capital provider and worked to structure objective criteria that satisfied both the Sponsor and Lender. The non-recourse floating rate loan is floored at 6.0%, sized to a 75% LTV, 9.0% debt yield and 1.15 dcr amortized over 30 years.
January 16, 2014
1 – 15 – 2014 Transaction Description: George Smith Partners arranged a life company portfolio loan for a boutique waterfront Los Angeles hotel. The fee position is leased from the County of Los Angeles with 49 years remaining. The 10-year fixed rate non-recourse loan features: (1) 5,4,3,2,1 prepayment during years 6-10 of the loan term; (2) No cash management; (3) Non-recourse carve-outs limited to an entity; (4) Interest Only for the first two years of the term. The Sponsors have owned the property for over 15 years and performed a major renovation in 2010 which included new construction doubling the room count. The hotel features a 200 seat indoor/outdoor, well-regarded restaurant and bar with above average F&B income. Amenities include: valet parking, pool and hot tub, ocean views from 50% of the rooms, fitness facility and meeting rooms. Although the hotel is not flagged, it benefits from a major chain style reservation system run by the sponsors, who self-manage this hotel along with 25 other well located hotels.