$13,000,000 Hotel Bridge Loan

6 – 29 – 11
Transaction Description:  GSP arranged a bridge loan for the refinance of a seller carry-back plus “PIP” (Property Improvement Plan) of a flagged hotel in an industrial-centered section of Los Angeles. The bridge loan allowed the Borrower to replace the existing loan at a lower rate and provided additional funds for the hotel’s capital improvements.
Challenge: The Sponsor purchased the 200+ room hotel post-foreclosure in 2010. The previous operator poorly managed the asset causing occupancy and daily rates to fall. The bank foreclosed and our client purchased the hotel at a new, discounted basis from the original note. The foreclosing bank agreed to carry back 50% of the purchase price with the balance in cash. Because the property changed hands, the hotel franchisor required the new Sponsor to perform a substantial PIP to maintain the flag. With low attractive bank debt currently in the 1st position, our initial assignment was to identify a 2nd Trust Deed lender to finance the capital upgrades. Our lender conversations stalled when an inter-creditor agreement could not be negotiated with the 1st Trust Deed bank.
Solution: GSP returned to the market and identified a lender willing to finance the entire capital stack at a rate less than the current lender. The ultimate capital stack was substantially lower in rate than the initial A/B structure sought by the borrower. The Sponsor enthusiastically moved forward on the new option and closed the loan paying off the selling bank’s first TD and providing additional dollars necessary to complete the PIP and maintain the franchise.
Amount: $13,000,000
Rate: L + 275, no floor
Term: 36 Months
Amort: Interest Only
LTV: 60% as-is value
DCR: 1.25 (after 18th month)
Recourse
Lender Fee: 0.75%

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    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.

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    $62,200,000 in Sub 5% High Leverage Non-Recourse Bridge Financing on a Large California Hotel

    June 12, 2014

    6 – 11 – 2014
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    5 – 7 – 2014
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    Bridge Loan For Mixed-Use Hotel Property

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    8 – 7 – 13
    Transaction Description:  GSP successfully placed the bridge loan for the acquisition of a hotel, RV park, car wash, restaurant and vacant former casino commercial building located near Death Valley. The restaurant features slot machines and video gambling. The Sponsor purchased the mixed use property from the original developer who owned the asset for multiple decades. The subject is the best performing hotel property in this tertiary market, which serves as a gateway for campers traveling to Death Valley.
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