A key ValueXpress lending partner continues to seek high leverage hospitality loans. The bridge loan program is designed for transactions with loan amounts of at least $20 million for properties seeking shorter term funds to restabilize property cash flow after the recession, newer properties that have not reached stabilization, or other situations in which shorter term funds are needed. Typical loan structure is a 3-year term with payments based on a 25- to 30-year amortization schedule. LTV can be as high as 85% and debt-service coverage can be as low as 1.10x. Rates are in the mid-7% area for more than 80% LTV and can be lower for less leverage.
ValueXpress recently completed a transaction on a hotel property in which the borrower owns excess land and expects to construct another hospitality property within 24-36 months. “The borrower did not want to encumber the subject and excess land (which is not on a separate parcel) with a 5- or 10-year CMBS conduit loan,” said Sneden. “In addition, the borrower needed 80% leverage to clear the existing debt. The bridge loan was perfect as the borrower expects to obtain a construction loan/permanent loan solution to refinance the bridge loan and provide construction funds for the new property at bridge loan maturity.”
“We are working on another transaction in which the borrower constructed a full-service Hilton hotel in Texas a little over two years ago. The borrower wants to construct another Hilton hotel, but the existing property loan of $25 million is at the legal lending limit with the construction lender,” said Sneden. To provide a little challenge, the property is not fully stabilized and does not qualify for enough proceeds for a CMBS conduit loan to clear the existing $25-million loan. “This bridge loan program was the perfect solution,” commented Sneden. “The loan will provide $27.5 million in proceeds at an 80% LTV, with the cash out providing some of the equity for the new project.”