August 10, 2023
George Smith Partners successfully arranged $42,200,000 in financing to recapitalize the construction of a 133-key extended-stay hotel on Music Row in Nashville, TN. The Lender disbursed 71% LTC, accompanied by a 12-Month interest reserve.
Multiple challenges were encountered when discussing the transaction with capital providers. The first being that the hotel is unflagged- many hospitality lenders focus primarily on popular hotelier affiliations during this risk-constrained lending environment. The team encountered a second hurdle related to mid-construction refinancing, which presented a challenging proposition from the outset of our campaign due to the hotel’s planned grand opening before November of 2023.
The GSP team was determined to leverage the deal with support from the local Nashville sponsor that owns and manages over 600 keys in the Nashville market and over 2,000 keys in the southeast, property location on Music Row in Nashville, and construction completion.
GSP successfully identified a hospitality Lender that exhibited confidence in the construction recapitalization process. This Lender was equipped to furnish the necessary funds to facilitate a smooth transition into TCO. Additionally, displaying confidence in the projected Average Daily Rate (ADR) assumptions. Notably, the Lender displayed comfort in financing the unflagged and extended-stay hotel, due to the Sponsor’s reputable track record in the market.
June 7, 2023
George Smith Partners arranged a $47,000,000 fixed-rate, non-recourse, construction loan for the development of a four-star boutique hotel in a coastal community of California. When completed, the property will include 102 rooms and a fine dining restaurant.
The project experienced significant public resistance and ultimately, entitlements took 20 years to obtain. GSP was originally engaged to arrange institutional equity and fixed-rate construction to perm debt in the spring of 2022. GSP was successful in doing so, however, market volatility caused the deal to stall and ultimately the developer elected to dispose of the project to another developer. The new developer engaged with GSP to obtain new financing terms.
GSP focused on the strength of the sponsorship team, high barriers to entry, supportive hotel flag, positive historical occupancy, ADR-both before and after Covid, popularity of the local demand drivers, as well as the lack of competing quality hospitality properties in the immediate vicinity. Ultimately, GSP arranged a solution that met the needs of the sponsor.
Rate: Fixed at 8.60%
Term: 2 Years + 1 Year Extension Option
Fees: 0.50% Lender Fee
Guaranty: Non-Recourse except for Standard Carveouts
- Advisors: Scott Meredith
October 26, 2022
George Smith Partners successfully placed a $16,900,000 cash-out CMBS loan to fund the refinancing of a limited-service hotel located in Central California. Backed by strong travel demand, the hotel was performing better than ever with additional revenue growth expected in future months. The Property was encumbered by a bridge loan nearing the end of its term and the Sponsor was looking to maximize proceeds to secure a cash-out refinance.
CMBS lender appetite toward hotels has picked up since the pandemic and the hotel received multiple bids from lenders. The 10-year fixed rate loan represents a 65% loan to the appraised value. Most CMBS lenders underwrote the loan to a 12% debt yield but due to the successful advising process of George Smith Partners, the chosen Lender was able to close using a 10.75% debt yield on T-12 income. Having experienced a dip in revenue through the COVID-19 pandemic, underwriting this asset required additional diligence to truly understand the stabilized cash flow. The hotel was experiencing a ramp-up in demand as drive-to markets have been extremely well-traveled since the pandemic. GSP and the Sponsor timed the refinance so that the hotel generated strong cash flow and secured an attractive rate during a rising rate environment.
Term: 10 Years
Rate: 10 YR SOFR Swaps + 355 Fixed
Guarantee: Non-Recourse with Standard Carveouts
July 27, 2022
George Smith Partners successfully arranged a $9,907,500 loan for a very special project in San Francisco that provides huge benefits to the City and the Community. Utilizing our relationship with a community development lender, GSP was able to secure a 3.5% interest rate, 10 year loan, for a drug-free rehab facility in the South of Market (SoMa) area of San Francisco. The Facility aims to transform the lives of the surrounding community with help from the City. The Project was a vacant hotel with shared bathrooms, bordering some of the roughest areas of San Francisco. Most lenders passed on the project, but because of GSP’s experience with SRO properties, we were able to negotiate a below market rate for 10 years to enable the Project to move forward.
The loan allowed for the rehab and redevelopment of an old SRO (Single Room Occupancy) tourist hotel with shared baths into the updated 80 room facility, which included new private bathrooms in each unit. It is great to not only successfully close a difficult loan, but to see the way the Sponsor was able to transform lives and solve community challenges.
The Project will house people who are struggling with substance use from the streets to a safe place indoors. They can access clean bathrooms, showers, food, and a place to rest. Afterwards, the staff can help participants connect with medical care, mental health, substance use, and housing services. The Center was designed to improve safety for both participants and neighbors by creating a safe place for people experiencing a drug related crisis.
Amortization: 30 Year
Term: 10 Years
June 1, 2022
George Smith Partners secured permanent financing for an unflagged, 90-key, boutique art hotel in Tucson, AZ. The Sponsor acquired the Property in 2017, and completed a full renovation and rebrand in 2018, primarily with cash. The Hotel performed extremely well prior to the pandemic. While revenue and NOI declined, along with most hospitality assets during that time, the Property has since recovered to and exceeded pre-pandemic levels. Despite the Property being unflagged and located outside downtown Tucson, GSP was able to leverage its strong lender relationships to source CMBS and Life Insurance Company quotes. The Sponsor ultimately chose a LifeCo lender who offered a combination of low rate, longer amortization, prepayment flexibility, and potential to increase proceeds during the loan term.
Rate: 4.59% Fixed for 5 Years
Term: 15 Years (5+5+5)
Amortization: 27 Years
Guaranty: Partial Recourse
March 22, 2022
George Smith Partners successfully arranged $30,139,000 in construction financing for the phased adaptive reuse of a landmark office tower into a 145-key upper-upscale lifestyle hotel with boutique-quality amenities. Located within a Qualified Opportunity Zone in the heart of Downtown Tucson, the Project is a focal point in the downtown skyline, offering unparalleled accessibility to numerous restaurants, bars, shops, and entertainment venues.
The financing capitalized renovation costs related to the redevelopment of the office tower; the Project also qualified for valuable tax benefits intended to spur new development in the surrounding area.
The Downtown Tucson market currently has only one upscale lifestyle hotel, while market growth has created a strong demand for upscale product within the hotel sector. Bolstered by local knowledge and industry expertise, the top-tier Sponsorship team recognized the gap within the market and identified the asset as a unique opportunity to create a transformative hotel in the city’s employment and social epicenter. GSP was able to identify an institutional-quality lender who not only understood the substantial value of the Project’s tax benefits in a high-growth market, but also the Sponsor’s ability to execute on the business plan.
All Terms Confidential
February 2, 2022
George Smith Partners arranged $42,500,000 in construction financing for the conversion of a 496-key hotel to a market rate multifamily complex in Southeast Colorado Springs. Spanning 17 acres, the Project features 496 units and boutique amenities: restaurant & bar, fitness center, indoor & outdoor swimming pool, sport court, convenience store, and 294 self-storage units that will be made available to the public. The financing capitalized the hotel acquisition, renovation, and targeted deferred maintenance.
Colorado Springs is an ultra-high-growth submarket and consistently ranked as one of the best places to live in the United States. Bolstered by substantial job diversification, there has been an influx of young professionals and military personnel due to the surrounding five military bases. The Sponsor identified the hotel as a prime candidate for the conversion, offering a low basis, and best-in-class amenities to create significant value and drive occupancy rates. GSP was able to identify a lender who not only understood the pent-up demand for affordable housing in the booming submarket, but also the Sponsor’s ability to execute on the intended business plan.
All Terms Confidential
June 9, 2021
George Smith Partners successfully placed the $19,000,000 cash out CMBS loan to fund the refinancing of a select service hotel in Southern California. The 10-year fixed rate loan locked below 3.75%, fully interest only. The financing was successful despite significant headwinds on hotel operations due to the pandemic, but GSP was able to source a creative CMBS lender that not only sized the loan based off of 2019 performance, but also allowed for a two-year holiday from any debt yield test covenants. With California and the country as a whole reopening following the global pandemic, and best-in-class ownership and management in place, GSP was able to build a story around recovery to achieve favorable terms in a challenging environment.
Term: 10 Years
Amortization: Full Term Interest Only
March 4, 2020
George Smith Partners arranged $23,750,000 in bridge financing for the refinance of a 229-key, full-service hotel located in Downtown Minneapolis, Minnesota. The Hilton branded hotel is proximal to major demand drivers and includes a partnership with a Fortune 500 company, with headquarters across the street from the asset. The Property, built in 1986, underwent a PIP in 2017. The bridge facility allowed the Sponsor to pay off existing debt, which had an approaching maturity date in addition to completing the ramp-up period, forecasted to finish in 2020.
GSP conducted a full marketing process and was able to leverage market interest to secure the most competitive terms available by focusing attention on the superior location as well as the Sponsor’s familiarity and confidence in the market. The Sponsor developed, owns, and operates a 290-key hotel less than a mile for the Subject Property. The selected Capital Provider structured around the current market softness, recognizing the strength of the Sponsor and their ability to successfully operate hospitality properties.
All terms Confidential
- Advisors: Evan Kinne
October 8, 2019
George Smith Partners arranged $16,300,000 in non-recourse construction financing for the ground-up development of a 115-key select-service, extended-stay hotel in West Sacramento, California. The Project is located across the bridge from Downtown Sacramento on a main thoroughfare and within direct proximity to the newly built West Sacramento City Hall. The Project is well positioned as an economic alternative to travelers and a convenient option for long-term local guests. The financing allows the Sponsor to break ground on their third hotel under development in the greater Sacramento metropolitan area.
GSP identified a capital provider who was intent on securing a long-term relationship with the Sponsor, recognizing their extensive hospitality experience and ability to execute both on the construction and on the overall business plan with a high-degree of surety. Forming this relationship earned them a highly leveraged deal, sized to north of 80% of total project costs. The interest only, non-recourse construction loan is priced at a spread of 1 Month LIBOR plus 750 basis points, with a three-year term and two 12-month extension options. GSP highlighted the submarket’s various economic drivers, demonstrating its appeal as a pioneering and cost-effective market with tremendous growth potential.
Rate: 1 Month LIBOR + 7.50%
Term: 36 Months with Two 12-Month Extensions (3+1+1)
Amortization: Interest Only
- Advisors: Evan Kinne
$15,050,000 CMBS Non-Recourse Permanent Financing for the Acquisition of a 130-Key Marriott Branded Select-Service Hotel; Corona, CA
August 7, 2019
George Smith Partners successfully arranged $15,050,000 in non-recourse permanent financing secured by a 130-room Marriott branded select-service hotel in Corona, CA. The hotel is located at the gateway of the Inland Empire, close to the freeways. The loan is sized to 72% LTV fixed for 10 years at 4.79% with 30 year amortization.
The Sponsor acquired this hotel as an expansion of their current hospitality portfolios. They were looking for high leverage financing to minimize the cash down payment required at closing.
GSP sourced a lender willing to provide higher LTV than most other hotel lenders on a non-recourse basis which minimized the Sponsor’s cash equity contribution at closing. The Lender understood the potential of the Inland Empire lodging market and was able to navigate through the complexities of the transaction and loan process. GSP facilitated and expedited the closing in order to meet the deadline of the purchase contract. Additionally, GSP pre-negotiated with the Lender to waive their $7,500 application fee and capped their legal fees at $35,000.
Rate: 10 year Swap + 2.78%
Term: 10 year fixed rate loan
Amortization: 30 years
Debt Yield: 10.9%
Debt Coverage Ratio: 1.70x
Lender Fee: Par
$460,000,000 Non-Recourse Senior Construction Financing for the Ground Up Development of Block 216, a 35-Story Mixed-Use High-Rise Anchored by a 251-Key Ritz Carlton Hotel; Portland, OR
July 24, 2019
George Smith Partners structured and placed a $460,000,000 non-recourse senior construction loan for the ground up development of Block 216, a landmark 1.1 million square-foot ground-up high-rise development in the heart of Portland, Oregon’s central business district. The 35-story luxury high-rise will be anchored by a 251-key five-star Ritz-Carlton hotel, the first five-star hotel in Portland. The development also features Ritz-Carlton branded residences, 140,000 square feet of Class A office space, and 7,800 square feet of ground floor retail, which will open up to a pedestrian “festival street.” Located at the intersection of the Central Business and Pearl Districts, Block 216 spans a full city block. This is extremely rare in Portland. Upon completion in 2023 Block 216, will be the fourth tallest high rise in Portland and the largest tower in Portland based on square footage.
Block 216 represents the first luxury, five star hotel and branded residential project in Oregon. It is also the first project with amenities common to luxury properties but absent in Portland thus far. This ground up development is also a true mixed used project with four different uses (hotel, residential, office and retail) in a single building.
GSP focused on Portland’s incredibly strong underlying fundamentals, including: its population of 2.5 million; its unemployment rate 50 basis points lower than the national average; its 1,200 tech companies (hence the name “Silicon Forest”); the impressive number of blue chip companies with presences in the market; and, the considerable number of institutional investors active in the market. GSP also stressed the Project’s unparalleled location and walkability to every major amenity in Downtown Portland as well as the 30 new conferences booked at the Portland Convention Center as a significant demand driver for five star accommodations.
GSP executed significant and high profile marketing to ensure the Project was appropriately received in the capital markets. These efforts resulted in a highly structured, non-recourse execution in less than six months from engagement.