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Transactions
Permanent Loan & Construction Loan Financing
Hilton Garden Inn - Detroit
Milestone Realty Services, Inc. worked
in a mortgage brokerage capacity to procure construction and permanent
loan financing for
the development of a 198-unit Hilton Garden Inn located in the
Harmonie Park section of the Detroit Central Business District.
Property
The Hilton Garden Inn was a proposed 198-unit first class
hotel located in the Detroit Central Business District,
within three
blocks of the newly developed Ford Field, Comerica Park, and
Greektown Casino, and within walking distance of the World Headquarters
of General Motors Corporation and Compuware Corporation. This
property is the first hotel to be built in the City of Detroit
in more than ten years.
Owner Objectives
The developers of this project, the Ferchill Group, had previously
received commitments for equity and construction and mezzanine
financing. In order to begin construction, a forward commitment
for a $14 million permanent mortgage was needed, and the developers
approached Milestone to solicit assistance in the procurement
of this component of the financing. The economic downturn and
post-September 11th travel slowdowns had caused many lenders
to abstain from lending on new hospitality construction projects
altogether, and others to significantly tighten underwriting
guidelines, creating one of the most difficult hotel financing
markets in recent history. Milestone quickly gained an understanding
of the project and utilized its knowledge of the hotel industry
and the Detroit area to assess the most likely lenders for such
a project.
Solicitation
Milestone prepared a comprehensive offering package on the project
which detailed the property’s proposed amenities, location,
facilities, franchise, development team, and operating projections,
and distributed it to those lenders deemed most compatible with
a project of this type. Milestone’s extensive knowledge
of union-based lending sources and lenders active in hospitality-related
projects was important to this process as it significantly streamlined
the initial phases of lender solicitation. During the course
of the project, we also were able to access our extensive database
of construction lenders to provide more favorable financing terms
than what the developers had in place, thus saving significant
interest during the construction period.
Negotiation
Milestone received and analyzed several proposals from permanent
and construction lenders, met with these lenders, conducted site
tours, and assisted in the flow of information. Milestone ultimately
aided the developer in the selection of The Union Labor Life Insurance
Company (ULLICO) as the permanent lender, and Bank of America REBG
for the construction loan.
Closing
While many mortgage brokers’ services stop with a signed
commitment letter, Milestone continued to work with the developer
in the negotiation of a 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, which included primary and
subordinated lenders as well as private and institutional equity
investors. Construction on this property commenced in January 2003
and is expected to conclude with an opening of the hotel in early
2004.
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