Financing acquisitions when expenses are unusually high and profits are low is fairly difficult. It is often a mundane process to add back very few seller expenses such as depreciation, amortization, and interest to the cashflow but when there are multiple addbacks that are not individually itemized, identifying and verifying them is a difficult task. Additionally, even when these addbacks are identified, the lenders may show little appetite for applying all these addbacks. Our challenge in this project was exactly that where we had to analyze the financials, to extract the addbacks, and to find lenders with appetite to finance these hotels when cashflow would only be positive after these adbacks. However, with usual diligence that the Scientific Capital puts into the projects, two lenders were separately identified as candidates for this project.

Both hotels are financed under conventional loans for a total of 12.5 million where Clarion is financed at 80% Loan to Value with 1 million PIP and Holiday Inn Express at 70% LTV of 8.5 million and 25 year amortization.