ValueXpress has arranged a $3.85-million CMBS conduit loan for the refinance of a three-story Comfort Inn hotel constructed in 2000. The hotel is located in Camden, Arkansas. The subject hotel was purchased in October 2014 and had not been significantly upgraded since that time, and it was sub-performing. The new owner believed that a complete renovation to the latest brand standards, including Choice Hotels Truly Yours initiative, would allow for growth in top-line revenue.
During 2015-2017, ownership embarked on a major Property Improvement Plan (PIP), which included all of the current Choice Hotel brand initiatives such as “Truly Yours,” “Your Morning Breakfast” and “Your First Impression” brand schemes. The total project costs were approximately $800,000, including $450,000 allocated to room FF&E. As a results guest satisfaction and property reviews have improved. Comments such as “hidden gem” and “what a surprise” have been made on TripAdvisor and 80% of respondents rating the property “Excellent” or “Very Good.” While the renovation period was disruptive, ownership was still able to grow RevPAR in accordance with the value-add plan and the budget RevPAR of $60.00 for the 24-month value-add period was achieved.
The loan was structured with a 10-year term and 25-year amortization. The loan provided for cash-out proceeds to reimburse the sponsor for the capital invested for the renovation. In addition, the CMBS conduit loan refinanced a high-rate floating rate SBA loan that was at risk of resetting even higher during 2018.