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$25,000,000 Bridge Financing for a Recently Completed 150-Room Hotel Located in the Southwest

Rate: One-Month LIBOR + 5.00%
Term: Two years + One, 1-Year Extension
LTC: 59%
LTV: 66%
Guaranty: Non-Recourse

George Smith Partners successfully placed $25,000,000 financing on a 150-room recently completed hotel in the Southwest. Despite ongoing construction arbitration on the Property, GSP sourced a lender who understood the seasonality of the market and the MSA. The Property is the first new-build luxury hotel in this community in over 30 years. Proceeds from the loan were used to pay off the construction financing and provide working capital.


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    Transaction Description:

    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.

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  • $2,700,000 Cash-Out Refinance Bridge Loan for an Unflagged Boutique Hotel

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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

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    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.
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    5 – 7 – 2014
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    8 – 7 – 13
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