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Hospitality Financing

The Madison Group Arranges a $5,880,000 Loan for a Hotel Purchase in Utah

Tags: hotel financing, hospitality loans, flagged hotel finance experts
Monday, Oct 22, 2018
by Angela

The Madison Group (TMG), a leading source of hospitality financing nationwide, arranged a $5,880,000 conventional loan for the purchase of a flagged hotel in Bountiful, Utah.  The borrower’s goals were to secure a long-term rate with the best possible terms. TMG secured the 10-year term financing with a fixed rate of 5.75%, a 25-year amortization at 75% loan-to-value and no prepayment penalty.

The property, built in 1999, consists of 85 units in one building with a total of 51,839 square feet.  The property is in excellent condition as the seller completed a required property improvement project in 2017.  The buyers have several other hotels in the Utah market and were utilizing a 1031 tax-deferred exchange for the purchase of this property.

Among the challenges TMG faced in arranging this loan was the fact that many of the local lenders that provide hospitality loans are currently out of money for this property type. Furthermore, the buyers have used their SBA allotment, so they needed a conventional loan.  Additionally the property’s revenue had declined in 2016 and 2017 due to the PIP being completed, but the trends show an increase in occupancy since the completion of the repairs to the property.

The team at TMG used its knowledge of the local lending market allowing TMG to reach out to the right local lenders to find a group willing to fund this request at 75% LTV with a good rate and term. 

 We found a lender that offered flexibility with the underwriting, a great rate and term and the ability to close the purchase transaction within the 1031 time frame,” said Angela Kesselman, TMG’s associate director of Finance.

The financing was arranged by Angela Kesselman at The Madison Group.