Hotel Financing
My firm is buying a Hotel property (first hotel transaction) in a major city. Has anyone got a term sheet from a direct lender? what kind of LTV, rate were you able to get?
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Most recent quote is 60% at 495..
Marriott flag, imminent PIP, good market etc.
Your question above leaves out innumerable variables
LTVs are between 60-65% right now with balance sheet lenders. Many lenders are pulling back and will only do select deals if you have an existing relationship with them.
Rates are looking like SOFR + 300bps.
Shoot me a PM if you want to chat further. I'm not on the lending side but our firm is heavily geared towards hotels so happy to discuss what we're seeing on the debt side.
Are you guys LPs?
We are not LPs. Family office investing in select service properties.
If it's your first deal, in the current economy a bank loan for a hotel will be difficult. Unless of course your company has deposits with a bank many multiples of the potential loan amount. The best bet is to run it by the debt funds that specialise in hospitality: Access Point Financial, OWS RE Finance, Stonehill etc. A month or two back, a term sheet on Core Plus with no PIP Hilton flagged in a strong market: 60% LTV @ SOFR + 375. If you are willing to place CMBS debt, it could be a little cheaper. NB: I think if I priced the deal again today, it would be at a wider spread because of the expected rate hikes.
Are you on the lending side for hotels? If so, would love to pick your brain on a few things if you're open to it.
Although I worked for banks in RE lending, currently I am not in lending - I am on the equity side investing across wide range of asset classes, including hotels
Thank you. We are struggling to find a lender. I think we might end up buying all cash if that's the case. SOFR+375 is very high..
Unless your going in or stabilised cap rate is above loan interest rate, in todays debt environment, you will find many core/core plus assets pencil in @ negative leverage i.e. interest rate higher than aforementioned cap rates
Try Natixis for hospitality.
one off hotel deals are nightmares to manage imo
It doesn't help you out as a fund, but SBA 504 loans are still going strong in hospitality with LTVs of >80% and long-term fixed rates. Just has to be for a true small business.
Axos Bank - Charles Ruffin, find him on LinkedIn send msg.
Balance sheet/debt fund money for hotels is not abundant right now. I work in CMBS and we have seen plenty of hotel borrowers go out to the entire market and come back to CMBS because debt fund money is 350+ spreads. Earlier this year, CMBS spreads tightened significantly, making CMBS the best option for hotels and office in terms of spread. Obviously, prepayment flexibility is very minimal, but the all in coupons are definitely lower than debt funds for hotel borrowers and especially office. Something to think about for a lot of equity shops…
Hotel lender here. We’re very active in this space. Feel free to PM. Happy to provide some guidance.
As another poster mentioned, it will be tough to get money from lower cost lenders without a hotel track record.
FYI - I thought I'd share this for database. We were able to get some quotes/Term sheet - It looks like the market is in line with what everyone said here.
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