Rate: One-Month LIBOR + 5.00%
Term: Two years + One, 1-Year Extension
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.
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
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.
Rate: 7.90% Months 1-12 | 8.30% Months 13-18
Term: 18 months
Amortization: Interest Only
Prepayment Penalty: None
- Advisors: Gary M. Tenzer
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 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.
August 7, 2013
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. Challenge: The tertiary market, an unincorporated town with a population of just over 35,000, proved to be a challenge for most prospective lenders. The large vacancy created by the former casino was a drag on overall occupancy, while driving down property value on a capitalized basis. Due to the multiple uses and lack of directly comparable properties, both Lender and Sponsorship had difficulty deriving an actual cap rate and value for the asset. Solution: GSP was able to source a West Coast Lender with the real estate knowledge to understand the strengths of the asset, regardless of the tertiary location. GSP and its Sponsor articulated the strengths of the asset with the large vacancy in place, and the potential upside presented by the space. GSP consulted multiple local appraisers to arrive at a capitalization rate which kept leverage (from a value perspective) at a satisfactory level for the Lender.
June 29, 2011
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: $13,000,000Rate: L + 275, no floorTerm: 36 MonthsAmort: Interest OnlyLTV: 60% as-is valueDCR: 1.25 (after 18th month)RecourseLender Fee: 0.75%