West Los Angeles

GSPs Ameet Chagan placed the $5,500,000 non-recourse cash-out refinance of a 47 unit limited service boutique hotel in West Los Angeles. The asset, constructed in 1985, was free & clear at the time of funding representing a 100% return of equity to the Borrower. Sized at $117,000 per key, the 10-Year term is fixed for 7 Years before floating at 2.75% over Prime. The step-down prepayment is 5%, 4%, 3%, 2%, 1%, open. Challenge:Cash out requests on non-flagged hospitality are the exception and far from the norm. Non-recourse financing on hotels garners further scrutiny and the loan per key request is relatively high for a limited service hotel. The Sponsor required a long term fixed rate with a flexible prepay option and reporting structure which ruled institutional lenders out. This asset was difficult to comp out as most boutique hotels have a food and beverage component. Franchised limited service hotels trade at a substantially higher capitalization rate. Solution: GSP identified an experienced hospitality lender with a healthy balance sheet that understood the superior operating history and location of the high quality asset. The lender became comfortable with the significant return of equity and the property performed exceptionally during the market downturn. The lender became comfortable by extending a non-recourse loan as the Sponsor owned this asset for almost 30 years and proved his “hands-on” approach to management and pride of ownership. This location has exceptionally high barriers to entry. The appraisal relied upon the strong historical operating history in their confirmation of value for this unique asset.