ValueXpress has arranged a $6.2-million CMBS conduit loan for the refinance of a Best Western Hotel constructed in 2002. The three-story property is located near the Galleria section of Houston, Texas.
The subject property was acquired by Fountainview BW, LLC in August 2014. The property was absentee owner-owned and was underperforming the market in terms of both occupancy and ADR. New ownership immediately embarked on an aggressive marketing plan to be followed by a capital improvement plan to begin in the first quarter of 2015. A portion of the loan proceeds was escrowed to complete the program, including an extraordinary opportunity to create additional revenue by placing 3 more guest rooms into service, thereby increasing the room count to 72. All permits and authorizations from the franchisor are in place to complete these rooms. The rooms are currently configured as 3 guest rooms similar to the balance of the hotel; however, they are being used for storage and require carpet, paint, case goods, and bathroom renovation.
The new CMBS conduit loan provides for a 10-year term with a 25-year amortization schedule and is non-recourse. The loan provided for cash-out proceeds, allowing the sponsor to recover excess equity as the bank loan utilized to purchase the property was low leveraged. Financing was provided by an active CMBS conduit lender that has an ongoing relationship with ValueXpress to arrange additional CMBS conduit loans.