ValueXpress has arranged a $4.8-million CMBS conduit loan for the refinance of a three-story Hampton Inn hotel constructed in 1999 and renovated in 2013 in anticipation of securing a new franchise license. Post-closing, the property intends to complete a Property Improvement Plan (PIP) to bring the property in compliance with the new Forever Young Initiative (fyi) rolled out by Hilton in January 2014. fyi is designed to keep the brand fresh and focused on the emerging Millennial traveler market. The program will require upgraded guest rooms, guest baths, and exterior design elements. For new builds, the core elements of fyi will become part of construction standards.
Creating a modernized look, these new construction standards include contemporary bathrooms with a clean, white design, as well as movable desks and ottomans. Power outlets will be positioned for staying connected, and rooms will additionally offer streamlined case goods like a mini-fridge and wire baskets for storage.
The sponsors expect to commit approximately $600,000 to fyi in addition to $300,000 spent in 2013. This investment will ensure the property maintains its position as the market leader within the Lakeland, Florida community.
“This loan is another perfect example of the benefit of CMBS conduit loans,” explained Jay Bhakta, a Senior Loan Originator at the ValueXpress Jackson, Mississippi office and 15-year ValueXpress veteran. “The sponsor’s prior loan did not have an escrow for future capital improvements, and therefore, the sponsor would have to request funds from the four partners to complete the PIP. Instead, the cash-out CMBS refinance will provide the capital for the PIP and return some equity to the partners as well.”