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Permanent Loan Financing
Chanler Hotel - Newport, Rhode Island

Milestone Realty Services, Inc. worked in a mortgage brokerage capacity to procure permanent loan financing for a 20-unit luxury hotel and restaurant in Newport, Rhode Island.

Property
The Chanler Hotel is a 20-unit luxury hotel with a 200-seat upscale restaurant located along the world famous Cliff Walk overlooking the Atlantic Ocean in Newport, Rhode Island. This hotel, which was the result of a complete renovation of a historic mansion, is among the most upscale hotels in this historic vacation destination. The Chanler Hotel was originally built in the mid-1850’s and was the first mansion developed along what has come to be considered “Mansion Row”, one of the most popular tourist attractions along the east coast.

Owner Objectives
The developers of this project were in the process of a three-year renovation and expansion of this four-acre property, including adding villas and back-of-the-house space, and were in need of permanent financing. The developer approached Milestone, who had previously financed another unique hospitality property for him, to assist in the financing of this hotel. The owner was seeking an avenue to take-out his existing construction lender.

Solicitation
After quickly gaining a full understanding of the project, Milestone prepared a Request for Financing Proposal, a comprehensive offering package on the project that detailed the property’s amenities, location, facilities, development team, and operating projections, and distributed it to those lenders deemed most compatible with a project of this type. The slowdown in travel due to the economic downturn and the truly unique nature of this facility created a targeted pool of lenders who would potentially have an interest in this property.

Milestone personnel have substantial experience in the development, management, valuation, and financing of hotel properties, which proved invaluable in this assignment. We were able to access our extensive database of hospitality lenders to review this project and eventually identified a group of lenders interested in providing permanent financing.

During the course of this project, Milestone identified that this development qualified for financial incentives, including a federal government loan program from the USDA that would guarantee a portion of the loan. Milestone proposed a structure to the financing that allowed the lender to increase its loan amount based on this incentive. We then worked with the borrower and lender to satisfy the government requirements and obtain the loan guarantee.

In addition to obtaining permanent mortgage financing for this project, we were also able to secure equipment financing to aid the developer in enhancing the leverage on his property.

Negotiation And Closing
Milestone met with interested lenders, conducted site tours, and assisted in the flow of information. Milestone obtained lender proposals and aided the developer in the selection of a regional bank for the permanent loan. While many mortgage brokers’ services stop with a signed commitment letter, Milestone continued to work with the developer in the negotiation of the commitment letter, coordination of due diligence, and review of loan documents, all to ensure a timely closing. The experience and expertise of Milestone proved integral to the success of this transaction.