ValueXpress obtained a $3.5-million first-mortgage loan commitment with its New York banking partner, Country Bank, from the SBA for an independent hotel located in Brooklyn, New York. The property securing the loan is a newly constructed seven-story, 72-room limited service hotel that opened in March 2011. The site, in the Bushwick section of Brooklyn, is in close proximity to Woodhull Hospital Center, a major local employer. The area has been undergoing a gentrification process with residents moving to the area for its convenience to Manhattan. The hotel features 54 queen rooms and 18 double bed rooms. The property is subject to a ground lease that has a term of 70 years.
“The transaction was a challenge as the deal was structured as a refinance in combination with a purchase of an existing partner’s ownership interest. In addition, the purchaser and seller of the ownership interest were relatives,” said Michael D. Sneden, Executive Vice President of ValueXpress. “Under SBA guidelines, if there is a transfer of ownership interest among relatives as part of the SBA loan, substantial justification of the purchase price must be provided. We provided the financial analysis to support the price of the transfer and received SBA approval,” noted Sneden.