Slatt Capital Senior Vice President Jeff Glenn, recently secured financing in the amount of $17,200,000 on a Home 2 Suites by Hilton in West Sacramento. The proceeds were used to take out the in-place construction debt.
Beginning with the start of COVID, occupancy rates within the hospitality sector fell dramatically. The property had only been in operation since 2021. As a result of rising interest rates, coupled with the volatility within the market, most lenders that normally placed debt on hospitality assets were waiting for the market to stabilize. The loan submission package was presented to over 41 lenders, most of which either fell short on proceeds or passed altogether.
We recognized that we needed to align the borrowers with a lender with a large presence in Sacramento, coupled with an understanding of the market. The property was operating at over 80% occupancy. After touring the property and other surrounding areas of West Sacramento, the lender was able to recognize the potential growth in the surrounding area, as large multi-family and mixed-use projects were underway. As a result of the borrower’s stellar track record specific to owner-user hospitality assets, it became evident that the risk factor was nominal.
Although the rate-lock period expired after the borrowers went under application, the lender was able to honor the rate. Subsequently, the rate was well below market at the time the loan closed. The loan amount included an initial funding of $15,080,000 (65% LTV) with an earnout of $2,120,000.
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