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
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
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.
September 27, 2013
9 – 25 – 13 Transaction Description: GSP successfully placed the cash-out refinance of a 136-key flagged San Diego hotel. The 65% LTV permanent loan included a $6,000,000 return of equity to the Sponsor. This asset services both business and leisure travelers, and is the top performing hotel in its comparable set. The seven-year term is fixed at 4.75%, and amortizes over 25 years. The loan closed in under 40 business days from application, and in a tumultuous interest-rate environment. The Sponsor received a free rate lock at application that was held until close. Challenge: With significant rate movement during the since Bernanke’s June speech, the Sponsor’s initial CMBS refinance fell through the week of closing due to skyrocketing rates and widening spreads. Indices similarly jumped during the processing of the replacement loan. Solution: GSP quickly re-entered the capital markets upon cancellation of the CMBS transaction; sourcing and negotiating favorable portfolio financing which included a free rate lock to hedge against fluctuating rates. Though rates did continue their upsurge during due diligence, the lender honored the rate lock and closed without any deviation from the executed term sheet.
June 27, 2013
6 – 26 – 13 Transaction Description: GSPs Ameet Chagan placed the $5,500,000 non-recourse cash-out refinance of a 47 unit limited service boutique hotel in West Los Angeles. The asset, constructed in 1985, was free & clear at the time of funding representing a 100% return of equity to the Borrower. Sized at $117,000 per key, the 10-Year term is fixed for 7 Years before floating at 2.75% over Prime. The step-down prepayment is 5%, 4%, 3%, 2%, 1%, open. Challenge: Cash out requests on non-flagged hospitality are the exception and far from the norm. Non-recourse financing on hotels garners further scrutiny and the loan per key request is relatively high for a limited service hotel. The Sponsor required a long term fixed rate with a flexible prepay option and reporting structure which ruled institutional lenders out. This asset was difficult to comp out as most boutique hotels have a food and beverage component. Franchised limited service hotels trade at a substantially higher capitalization rate. Solution: GSP identified an experienced hospitality lender with a healthy balance sheet that understood the superior operating history and location of the high quality asset. The lender became comfortable with the significant return of equity and the property performed exceptionally during the market downturn. The lender became comfortable by extending a non-recourse loan as the Sponsor owned this asset for almost 30 years and proved his “hands-on” approach to management and pride of ownership. This location has exceptionally high barriers to entry. The appraisal relied upon the strong historical operating history in their confirmation of value for this unique asset. Rate: 6.0% Fixed for 7 Years Term: 10 Years Amort: 25 Years Prepayment: 5,4,3,2,1, open Non-recourse Advisor: Ameet Chagan