Hospitality

GSP successfully placed the non-recourse refinance of a 90 unit limited-service hotel in a tertiary market of California. The MSA has a population of less than 360,000 people. The subject property had 8 years remaining on the franchise at the time funding. Fixed at 4.82% for five years, the loan amortizes over 25 years and was sized to 70% of appraised value. Challenge: The subject property was built in 2007 as an independent limited-service boutique hotel and later flagged with another limited-service brand in 2008. Despite franchising, the property went through significant turmoil during the recession. The existing loan was on a loan modification agreement with substantial back owed interest and delinquent property taxes. The note had reached maturity and there were no options for an extension. The borrower’s global cash flow would not support this asset and precluded many portfolio lenders from entertaining the loan request. Solution: GSP identified an aggressive lender that recognized the significant turnaround in the last two years of operation as a result of franchise change to Holiday Inn Express and accepted the borrower efforts their attempt to bring back-owed interest and property taxes current. Global cash flow concern was mitigated by demonstrating the owner’s pride of ownership and significant cash equity into this transaction. These metrics allowed the lender to see beyond the credit quality of the borrower and allow the subject property to outweigh peripheral circumstances. By engaging George Smith Partners, the borrower protected millions in cash equity invested in the property by avoiding a term maturity default and possible foreclosure all while achieving favorable pricing and leverage.