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Transactions
Permanent Loan Financing
Hampton Inn - Cadillac, Michigan
Milestone Realty Services, Inc. worked in a mortgage brokerage
capacity to procure permanent loan financing for a 120-unit Hampton
Inn Hotel in Cadillac, Michigan.
Property
This Hampton Inn is a 120-unit limited
service hotel located in the resort town of Cadillac in northern
Michigan. The hotel, which was originally built in 1990, has
been a consistently strong performer in the Cadillac market and
continues to be among the highest quality hotels in the region.
This property is currently undergoing its “Make It Hampton” renovations,
which should be complete in 2005.
Owner Objectives
The owners of the hotel, who
are also the original developers of the property, received an
offer from their existing lender of a discount to their mortgage
balance if the mortgage is paid off by an end-of-the-year deadline.
The owner approached Milestone, who had previously financed other
hospitality properties for them, to assist in the financing of
this hotel. The owner was seeking a 30-40 day approval and closing
schedule in order to meet its existing lender’s timetable.
Solicitation
Milestone, which maintains a working
knowledge of most hotel markets in Michigan and throughout the
Midwest, quickly gained 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, ownership/management team, and
operating history and projections, and distributed it to those
lenders deemed most compatible with a project of this type. Although
the property is a very high quality Hampton Inn and has maintained
strong cash flows over the years, the short timeframe excluded
many traditional lenders from this process.
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.
Negotiation/Closing
Milestone conferred with
interested lenders, facilitated site tours, and assisted in the
flow of information. Milestone obtained lender proposals and
aided the developer in the selection of a national hotel lender
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.
During the course of the due diligence
and closing, numerous issues arose which required immediate attention.
Milestone took an active role in the satisfaction of the lender’s
conditions, all to ensure a timely closing. The experience and
expertise of Milestone proved integral to the success of this
transaction.
In addition to obtaining permanent mortgage financing in an amount
adequate to satisfy the existing lender, Milestone also negotiated
other favorable terms on behalf of the borrower, including working
with the borrower to negotiate a larger discount than originally
offered by its existing lender. |
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