Cash-Out Refinance for a 50 Key Limited Service Hotel

Transaction Description: GSP arranged the cash-out refinance of a limited service extended stay hotel in Culver City, California. This fully stabilized hotel maintained consistent cash flow through the economic downturn.

Challenge: Due to market conditions, hospitality properties are difficult to finance. The borrower also required a return of their initial capital investment and a low mortgage constant to preserve their net cash flow. Several of the investors were only willing to guarantee on a pro-rata basis to their level of investment.

Solution: GSP was able to demonstrate that the property’s consistent occupancy and superior location warranted debt financing for this less-than traditional product type. GSP mitigated the lenders’ recourse concerns with the low leverage and length of ownership. The 30 year amortized schedule also provided a low mortgage constant for improved cash flow.