Hotel owners who attended the recent Asian-American Hotel Owners (AAHOA) Convention and Trade Show in Las Vegas, NV were encouraged by the improvement noted in room sales in late 2010 and 2011 to date after poor business conditions resulted in revenue declines of at least 10%-30% during the 2008-2009 recession. Most hotel owners agreed the worst was over for this downturn in the business cycle.
With optimism in hand, hotel owners were looking for debt capital to replace maturing loans, purchase properties and take cash out of existing properties to reinvest in other opportunities. Others have been offered discounts to pay off lenders trying to reduce hotel loan exposure in their portfolios.
Business was brisk at the ValueXpress booth at AAHOA; we were offering fixed-rate non-recourse CMBS conduit loans with rates starting at 5% for loans $5 million and up. This loan program is most attractive for owners who want to obtain cash-out on a refinance, lock in a low fixed-rate before rates rise, or those who have been offered discounts to pay off debt on performing properties. Some financing requests presented to ValueXpress at the show included (1) an $11-million loan on a Hilton Garden Inn located in West Virginia with a bank loan maturing this year without a likelihood of loan renewal despite 80% occupancy and a $100 ADR and (2) a $9-million loan on a Comfort Inn in San Antonio, TX looking for a 5.5% rate to replace a higher rate bank loan.
For loans under $5 million secured by both franchised and independent properties, ValueXpress presented SBA 504, SBA 7(a) and conventional loan options depending on the situation.
“The show was an enormous success for us,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “My associate Jay Bhakta and I are busy following up on six immediate loan requests for approximately $50 million. I will be headed down to Washington D.C. next week to work on two deals totaling $15 million that need immediate attention.”