Scientific Capital

Financing the Purchase & PIP of Hotel with $8.9 Million Conventional loan

In North Carolina

Hampton Inn
Raleigh, North Carolina

In general, conventional financing is more difficult to place, but when the property is older, the sponsors are from out of state, the financing is on a pro forma basis, and there is a large $2 million PIP, it becomes much more difficult. In this project, we were able to overcome all those negatives and close this $8.9 mm loan at about 68% Loan to total cost (including the PIP) and other expenses. We were able to project a RevPar upon completion of the PIP and show that such a RevPar cashflows the hotel at a comfortable Debt Coverage Ratio of 1.25 within the first year. We were able to structure interest-only payments for the first year and waive the FF&E reserve for the first three years.

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