ValueXpress has arranged a $22-million CMBS conduit loan for the refinance of a Four Points by Sheraton hotel located in San Jose, California in the heart of Silicon Valley. The hotel is a three-story, interior corridor, full-service hotel constructed in 1990 and substantially renovated by the sponsor in 2013 to Sheraton Four Points brand standards as part of a conversion from an independent hotel.
The subject property is favorably located in the southern portion of San Jose, near the intersection of State Route 85 and U.S. Route 101. The rapid growth of the technology industry accelerated the transition of the area surrounding the hotel from an agricultural center to a metropolitan area. Leisure attractions in the local area include various wineries, the Silver Creek Sportsplex, retail shops, restaurants and golf courses.
“The transaction faced numerous hurdles,” commented Michael D. Sneden, Executive Vice President at ValueXpress, who originated the loan. “First, the property was secured by multiple loans, all of which were in maturity default. I knew I was in for an intense effort when the first thing that popped up on the sponsor’s computer when I arrived on site for diligence was a foreclosure notice.”
“There was more. The sponsor had never done a CMBS conduit loan before, but he was willing to learn. There were credit issues to overcome and deficiencies that needed to be rectified with the franchise before it would issue a clean comfort letter,” commented Sneden.
“But at the end of the day the deal got done at a great rate. As with all jobs well done, the reward is a follow-on transaction. Watch the next newsletter for a report on that deal, which is even larger than this one.”