ValueXpress obtained an $11-million first-mortgage loan commitment from a CMBS conduit lender to refinance a 162-room interior corridor limited service hotel constructed in 2002. The hotel is located in immediate proximity to Liberty International Airport in Newark, New Jersey. The property was sold to the current owner in November 2008. The existing lender is reducing its hospitality exposure and offered the borrower an opportunity to pay the loan off at a discount.
Room demand is nearly exclusively derived from the property’s proximity to Liberty International Airport. The subject property has maintained stable occupancy through the economic crisis and associated recession, maintaining it market-leading penetration.
“The transaction was a challenge in that the borrower needed 80% LTV to make the deal work,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “Most conduit lenders are at 65%-70% on CMBS hospitality loans, which would not have generated enough loan proceeds to make the numbers work. However, we have a pre-CMBS crash relationship with a CMBS team that provides higher leverage loans, splitting the loan internally into a senior piece for securitization and keeping the subordinate piece in portfolio,” said Sneden. “It was just what the doctor ordered for this deal.”