Financing a Hotel Purchase & Formula Blue PIP
with 80% Conventional Loan in Virginia
Holiday Inn Express
Conventional hotel loans at higher Loan to Value are more difficult to arrange mainly because unlike pre-2009 era the national lenders are either no longer in business or just do not lend on hotels leaving regional and local lenders as the source for the conventional hotel loans. Since the appetite for the hospitality assets in the secondary market never recovered, the lenders have to now hold the hotel loans on their books. However, due to new regulations they can only portfolio a limited volume of special-use assets such as hotels. Many hoteliers contact their local banks only to realize that the capacity of these banks for hotel loans is full. This is where Scientific Capital makes significant contribution to our clients, we match the loans with our regional lenders that are having capacity for new hotel loans.
This loan was structured at 80% Loan to Value as a five-year fixed loan fully amortized for 20 years and resetting every five years at starting rate of 3.85%. Since a syndicated partnership was acquiring this hotel, we were able to negotiate a limited guarantee for each partner. We also negotiated a reduced lender point of a quarter of a point reducing the cost for our client. The loan also includes nearly 1 million of PIP (Propery Improvement Plan) required by IHG Formula Blue design specifications. The PIP loan will be interest-only for a year once the disbursement begins.
Our Other Projects With This Client
Conventional 80% loan for purchase/PIP of leased hotel
Stephens City, VA
Finance the purchase and PIP at 80% LTV
Finance the purchase and PIP of two hotels at 75% and 80% LTVs
Finance the purchase and PIP of two hotels at 80% LTV
Assumption of the existing seller's CMBS non-recourse loan for the buyer