$12,500,000, Cash Out Refinance on an Un-Flagged Boutique Hotel, West Hollywood, California.

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Transaction Description: GSP arranged the refinance on a recently renovated boutique hotel in West Hollywood, California. The 95 room hotel recently completed a renovation that included room upgrades, common areas and exercise facility improvements. The Owner retained a new operator for the ground floor restaurant which has become one of Los Angeles’ top eateries. Because of the recent renovation, occupancy and revenue have trended up significantly since the start of 2012.
Challenge: The Borrower re-financed the hotel in 2009 with a credit company and then embarked on a complete $2,000,000+ renovation of the hotel using personal cash. While the loan was secured during the downturn, the cost was over 200 basis points more than market interest rates. The Borrower required a more competitive interest rate and a reimbursement of his out-of-pocket renovation costs.
Solution: GSP worked with the Borrower and Appraiser to demonstrate that the recent up-tick of revenue was supportable over the long-term given the recent renovations. GSP surveyed the local market, studied the competitive set, and identified a lender comfortable with the return of equity. The property appraised so strongly that the Borrower was able to increase his cash-out by an additional $1,000,000 over the renovation funds invested by the Borrower. The Lender made no adjustment to the interest rate given the increased loan request.
Rate: SWAPs+305
Term: 10 Years
Amort: 30 Years
LTV: 50%
Lender Fee: Par
Brokers: Steve Bram, Jonathan Lee, Shine Cheng
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