In other words, you must prove-up your deal to the funding source. Assets America was incredibly helpful and professional in assisting us in purchasing our property. Term lengths for hotel loans typically vary based on how youre using the financing. Inevitably, the resort attractions are owned by, or have revenue-sharing agreements with, the hotel owner. Suite 1400 Nowadays, over half of all hotels in the United States are part of a franchise. Hotel property financing in its simplest form is the process of gaining sufficient funds to get your business off the ground - most often a mix of equity and debt, but potentially including any number of blended finance options. Expertise in sourcing finance for portfolio acquisitions, refinance, conversion and renovation projects. Celtic is also an SBA Preferred Lender, which helps expedite the funding process, and unlike many. The best thing about this option is it allows you to take some pressure off your business in the short term, while you get on your feet. Borrowers are responsible for any appraisal and environmental fees plus customary closing costs, including title, escrow, documentation fees and may be responsible for any bank fees including bridge loan, construction loan, and packaging fees. This personalized service, mixed with our expert knowledge of policies, procedures, capital markets, and operator transactions, saves our clients time and resources while ensuring the project is funded in the most financially beneficial way. Vrbo. Regardless of where your hotel is in the life-cycle, there is a great deal for it through our firm. We draw from over 34 years of experience in commercial finance. If youre looking for a hotel loan to finance a purchase or construction project, the lender will calculate the loan-to-value ratio, or LTV. Franchise arrangements have special considerations. . Call us today at (206) 622-3000 for a free consultation, or simply fill out the below form for a prompt response! There are dozens of specialty hotels. . Recommend them to everyone. As a result, your business plan will have to be of exceptional quality and detail, outlining your vision as well as projections of when you expect to break even, forecasted occupancy levels and startup costs. Full-service hotels offer a wide array of amenities and guest services. That said, the process of hotel financing isnt always simple. You use a microstay hotel when you need to book a stay for less than 24 hours. Fortunately, Chicago-based Clopton Capital is a trusted national commercial mortgage broker dedicated to matching borrowers interested in hotel lending to the most trusted direct lenders and correspondent lenders aligned exactly with their needs for asset-backed financing options. With decades of experience and market expertise, we specialize in providing the capital solutions you need now from bridge, construction and permanent loans, as well as mezzanine and preferred equity to capex and PIP loans, we are dedicated . Hotel construction loans require significant capital. It is also important to understand that hotel construction loans are a different process from other forms of hotel financing. Through this program, business owners have access to a team of experienced hospitality specialists who can provide tailored financial solutions, such as construction and bridge financing, lines of credit, Celtic Bank is a digital bank that focuses on small-business financing and, Celtic Bank offers SBA CDC/504 loans in addition to 7(a) loans and according to its website, has 10 years of experience funding hotel acquisitions, purchases and construction. Whether you are looking to acquire one property or many in the hospitality industry, we can structure the right loan for your goals. Disclaimer: NerdWallet strives to keep its information accurate and up to date. Our hotel financing solutions. They have no interest in your business concept or hotel other than its profitability. Commercial hotel lenders have a more conservative outlook and are more hesitant to fund ventures that fall into certain risk profiles than others. With an estimated US$2 trillion expected to be passed down from wealthy entrepreneurs to their heirs over the next 15 years, the rise of the family office shows little sign of slowing. It can be a slow process, but the time invested can help you develop strong and substantial relationships that yield great dividends over time. 20+ years of experience in the management, marketing and financing of international hotels, including 12 years as Business Development Director for Inkaterra Hotels. Motels usually are modest facilities close to highways. Hotel buildings range from small structures with only a few rooms to elaborate complexes with multiple buildings and extensive property. A group of investors in a corporation approached us to fund an independent hotel that was on a ground lease with the US Army. This approach is all about marketing, marketing, marketing you need to be able to get out there and tell non-traditional investors and everyday people why they should help to fund you. This information may be different than what you see when you visit a financial institution, service provider or specific products site. The principals of Stonehill have combined to originate and structure over $10 billion of commercial real estate and hospitality debt. Professional, fast response time and definitely gets the job done. At the same time, this presents some good opportunities for luxury and small hotels, as they carry less risk due to their lower cost bases. Destination clubs are more like resorts, often in a neighborhood-type setting. After your loan closes, youll be assigned an Asset Manager who youll work with throughout the life of the loan. However this is typically for very low leverage properties or bridge loan transactions. Ultimately, we received exactly the space we needed along with a lower than market per square foot pricing, lease length and end of term options we requested. You might consider a direct hotel lender if youre trying to finance a large project and could benefit from an expert working with you from beginning to end. While these hotel financing sources will accept higher risk, they also expect higher growth. Give us a call today at 404-497-1111 to . The spike in demand is driving up airfares. Largo has long-lasting lending relationships with its network of correspondent hotel lenders that is comprised of life insurance companies, banks, agencies and conduits. For a more detailed estimate of current rates based on the type of loan youre seeking, use our hotel loan estimate calculator below. If you are entering into agreements with friends and family, it is always a good idea to treat it as professionally as if you were doing so with a bank or private investor laying out the terms in a proper contract and sticking to them. This ratio is calculated by dividing the loan amount by the value of the property you are looking to buy or renovate. This information may be different than what you see when you visit a financial institution, service provider or specific products site. Our network of lenders is wide, but heres a list of some of our go-to partners. For many hotel businesses that dont require considerable funding, this is one of the first avenues to be assessed. secondary markets. With our extensive background in hotel and hospitality projects across the country, you can rely on us to identify and meet your lending and banking needs. Banks can provide hotel construction financing through construction loans or bridge loans. The decision making for the use of this capital is also changing hands, so if your project is appealing to a younger generation that is increasingly eager to focus on ESG investments, this could be an avenue worth looking into. Revenue per available room, or RevPar, is calculated by dividing the total room revenue by the rooms available. Although Stonehill may consider other use cases for its loans, many of its hotel financing options are centered on. When you are ready, we will work with . With so many potential sources of capital available, it can be extremely time and resource-intensive to select the right hotel financing option. Hotel development financing terms and rates are constantly changing, but there are some details that were always proud to offer our borrowers. A hotel owner structured in an LLC came to us looking to refinance and cash out of an existing Holiday Inn Express located in Florida. For hotel construction loans and renovation projects, raising capital is of central importance. Not all of these companies provide details about interest rates and. Acquisition, conversion, refinance, discounted purchase option or note purchase. For example, Marriott offers the following structure: There are many ways to characterize hotels according to their ownership, audience, amenities, and price. Some lenders require a DSCR of 1.25 a higher ratio is better it means you have enough money coming in to pay your existing debts. We understand hotels and hospitality, and the opportunities and challenges of this rewarding industry. However, many, if not most, hotels prefer to finance hotel construction renovations externally. Compared to banks and SBA lenders, alternative lenders usually provide quick funding, with streamlined online applications. A good lender evaluates the actual or projected financial metrics of a hotel project with the hotel construction financing when extending a loan offer. ARF Financial is an alternative lender that provides. We specialize in hotel finance with debt financing from $1M-$5B+. For all other hotel loans, the lowest minimum amount available is $5 million. Experience. Here is a short list, in alphabetical order: Without professional help, hotel financing and hotel construction loans can be a complex and daunting task. Non-flagged hotels do not benefit from the name recognition enjoyed by flagged properties, and thus often compete on price. Assets America guided us every step of the way in finding and leasing our large industrial building with attached offices. 3 years Yield Maintenance, open prepay, thereafter. Thanks to our vast network of lending partners, well secure you the best possible rates, terms, and benefits based on your unique needs and asset classes. Completion guarantee required.Personal and/or corporate guarantees. If you are seeking hotel financing arrangements that suit your needs and your business model, Stonehill can provide you with expert assistance in identifying, applying and qualifying for hotel loans of all types. Residence Inn by Marriott and Extended Stay America are two branded chains in this category. If youre wondering how to finance buying a hotel, youve come to the right place. I highly recommend them to anyone needing commercial financing. Both are usually interest-only with terms of 18 months to 5 years. Its possible to self-fund renovations through operational cash flows segregated in renovation reserve accounts. For those clients developing new properties, we negotiate site acquisition and construction loans and handle all construction-related documentation required by . Our flexible packages make the most of your working capital so you . As low as 0% APR. He had owned the property for 4 years and had invested significant capital into improvements, thus increasing the net operating income substantially. Franchise agreements usually specify the degree of permitted market saturation. Of course, the construction of a new hotel project is the most complex form of hotel financing. The basis for the recovery and prosperity of this industry is the project financing of hotels and affordable long-term loans for the construction of new facilities or the reconstruction of existing ones. These loans are available with terms up to 25 years. We use an extensive network of local and regional banks and national banks for loans to build a hotel (hotel construction financing), buy a hotel (hotel acquisition), refinance a hotel or renovate a hotel. ArentFox Schiff represents hospitality clients in a wide variety of financing transactions associated with their development, acquisition, and disposition efforts. The hotel loan uses the physical real estate (i.e. Banks and SBA lenders which are typically banks and credit unions themselves usually offer low interest rates, long repayment terms and large loan amounts. We use an extensive network of local and regional banks and national banks for loans to build a hotel (hotel construction financing), buy a hotel (hotel acquisition), refinance a hotel or renovate a hotel. Youll benefit from full-service business banking backed by the strength of Western Alliance Bank, one of the countrys top-performing banks. We are able to offer fixed periods up to 10 years typically, however for high quality and low leverage deals we may be able to go out further. Banks are one of the primary sources of our hospitality financing starting at $20 million. Having them on our team meant that we could always receive truthful, timely and accurate answers to our questions. Your hotel financing project needs to account for large-scale construction down payments and the potentially long time period of construction. If youre looking to raise capital or restructure, book a consultation call with us today. Overall, they provided my team with a fantastic and highly professional service! We came to terms with the Seller, entered into a purchase agreement and opened escrow. $5MM $50MM. Work with the top hotel finance broker in the market and access highly competitive hotel financing for your properties. Instead, they may try to saturate a market by clustering hotels that appeal to different budgets and niches. Its a no-frills approach meant to appeal to those traveling on a budget who need a room for a week or longer. Stonehill is a direct hospitality lender that offers several different types of hotel loans, including permanent loans, bridge loans, construction loans, preferred equity loans and mezzanine loans, which consist of a combination of equity and debt. Great experience with Assets America. We service our loans in-house. Here is a list of our partners. Most Recognized and Trusted Capital Solution for Hoteliers. Hotel Lending Sources. Funding for construction projects. Ronny was very friendly and though we were unable to make something happen at the moment he gave me some direction to go. Some of the top hotels offer rooms with four-figure daily rates, although at the opposite end of the spectrum you can find roadside motels charging less than $30 per night for bare-bones accommodations. You can choose between a purchase loan, refinance loan, equity loan or equity line of credit, depending on what type of hotel financing your business needs. The first two loans, a US$392 million construction financing and US$792 million refinancing, both related to the development and commissioning of the 5-Star "Four Seasons Moskva Hotel" on Okhotny Ryad (Red Square). However, some motels offer hourly rates for occasions when guests only require brief use of a room. Hotels that repeatedly fail a brand standard audit face sanctions up to termination of the franchise agreement, removal of the brand, and exposure to damages resulting from a lawsuit. Re-imaging a flagged hotel requires a marketing makeover of the brand. All hotel franchises are considered. Loan amounts from $1,000,000 up to $100,000,000 +, Up to 75% Loan to value on a 1st mortgage - 85% with mezz/pref, Fixed periods from variable, 3, 5, 7, 10 years, Up to 30 year amortization, interest only period at lower leverage, Acquisition, Refinance, Cash out, bridge, and construction scenarios, Clopton Capital 2021 / All Rights Reserved, Hotel construction financing for a new building, Refinancing a hotel and/or getting cash out, Conventional commercial property mortgage loan, Hotel Loan to Value ratio up to 75% (80% with SBA or USDA), Up to 10 year fixed rates, risk-free rates, SBA 7a loans, SBA 504 program loans, & USDA loans (low down payment), Bridge loans (as low as 1:1 debt service based on cash flow), Purchase, refinance, PIP and construction requirements, All loans from $1 million to $50 million + and fast underwriting, We approach only lenders that specialize in hotel financing. Ronny was a pleasure to work with and is extremely knowledgeable.