Review of the Conventional Hotel Loan Program

The index used is generally PRIME. The determination of the rate is dependent on the hotel, the sponsors, and the geographic location of the hotel

There is less appetite for our national lenders to fund smaller loans. However, for strong projects, we do consider loans below 1million

The determination of the Loan to Value is dependent mostly on the hotel and the geographic location. However, strong sponsorship is an additional factor considered by our lenders. It is important to note that some lenders go to 80% to 85% but of the real estate (value that is not including good will and FF&E)

Generally conventional lenders such as banks do not require reserves (although there are exceptions)

The prepayment is generally declining 3 or declining 5 although there are different variations depending on the source we use

The cost estimate includes the following items:

• Lender processing fee: 0K to 4K
• Appraisal and the review: 4K to 6K
• Environmental Phase I report: 2K (some lenders use prior report)
• Survey: 0 to 3K (Only if a copy is not available- some lenders do not need a survey or their endorsement requirements does not madate a survey by the title company)
• Lender legal fees: 0K to 4K  (Some lenders use outside closing attorney)
• Misc such as credit reports, tax services, UCC search, etc.: $500 to 1K

Rates are generally fixed for 3 to 5 years

Costs

Lower costs compared to other types of hotel loans

Processing

Less paperwork intensive and easier underwriting compared to SBA or CMBS
program

Maturity

Generally the terms are five and upon the maturity of the loan, the borrower has to refinance. Some lenders do provide 10 year terms but the loan resets at the fifth year or becomes adjustable

Underwriting