The hospitality group of Integra Real Estate Capital sources debt and equity for the acquisition, refinance and redevelopment of hotel properties nationwide. As a leading commercial mortgage broker, our team has significant experience in all aspects of hotel financing and investment. We offer our clients strong lender relationships with all major capital providers that include: domestic and foreign banks, insurance companies, Wall St. conduits (CMBS), REIT’s, pension funds and private lenders.
Over the past 15 years, we have developed a network of senior-level relationships that extend throughout the national hospitality finance community. Our daily interaction with hotel lenders allows us to closely track lender appetite and capital allocations for each lending institution. Integra also facilitates financing for PIP’s and purchase of FF&E.
Strong Lender Relationships
Interest Rate Guidance
Up-To 80% LTV (w. mezzanine)
Flexible Loan Structures
Acquisitions & Refinance
CONVENTIONAL HOTEL LOANS:
Non-Recourse / Fixed or Floating Rate / Assumable / 25-30 Year Amortization / Flexible Structure
Integra’s long-standing lender relationships provide non-recourse financing for the acquisition and refinance of hotel properties. We facilitate customized loan structures with low interest rates, longer amortization periods and flexibility. These hotel financing options are designed for cash-flowing and stabilized hotel properties in primary, secondary and tertiary markets. All hotel franchises are considered.
Our capital sources for conventional hotel financing include: domestic and foreign banks, Wall St. conduits, life companies and REIT’s. These loans feature fixed-rate 5,7 and 10-year term loans and are accompanied by 25 or 30-year amortization schedule. The maximum achievable Loan-to-Value (LTV) is 75%, generally offered for acquisitions, where fresh equity is being contributed by the sponsor at closing. The LTV associated with a refinance is typically capped at 70%. Integra’s strength in arranging debt for flagged and boutique operators has provided our clients the freedom of managing and growing their hotel portfolios.
HOTEL BRIDGE LOANS:
Benefits of hotel bridge loans: Non-Recourse / Future Funding Facility / Interest-Only / Flexible Loan Structures
Integra originates short to medium term non-recourse bridge loans for the acquisition and redevelopment of existing hotel properties. These loans are ideal for transitional, non-stabilized assets with a value-add component, or segments where a quick closing with certainty of execution is needed. Our hotel bridge loan platforms are available for flagged (franchise) and boutique (independent) hotel operators who are looking for certainty in interest-rate, loan terms and flexibility while undergoing a transition. These transitions include renovation, recapitalization and the ramping up of the occupancy levels at the hotel.
Our experienced loan officers are committed to guiding you through every phase of the bridge loan process. These interim loans carry either a fixed or variable-rate structure and are generally priced over a LIBOR index. Terms range between 12-36 months with options to extend the loan beyond initial maturity date. Virtually all of the bridge loans arranged by Integra are interest-only and based on non-recourse basis.
HOTEL CONSTRUCTION LOANS:
Highlights of hotel construction financing: Up-To 75% LTC / Interest Only / Flexible Draw Schedule / 2-3 Year Term
When it comes to arranging competitive hotel construction loans, we utilize our trusted network of construction lenders that provide speed, execution and certainty. Our relationship lender list is comprised of domestic and foreign banks, insurance companies, as well as debt funds that have the ability to offer non-recourse construction loans for experienced developers with a good track record. Having the right relationship in this arena is critical in getting your hotel project off the ground in a timely manner and properly funded. Aside from the brand and location of the project, sponsorship remains the single most important characteristic in construction financing.
By engaging Integra for your next hotel development project, you will gain access to relationships that we have fostered through the years. Our experts will underwrite the economics of the construction budget and negotiate aggressively on your behalf to achieve a well-structured loan that is customized to your financing needs.
HOTEL MEZZANINE FINANCING:
Non-Recourse / Up-To 80% LTV / 5, 7, 10 Year Term / Interest-Only Available
Integra Real Estate Capital arranges mezzanine financing for hotel properties located in primary and secondary markets that feature strong demographics. These loans allow hotel operators to go higher in the capital stack (LTV) and are also considered as subordinate financing to the senior loan. Mezzanine loans are generally ideal for opportunistic purchases to minimize the direct equity contribution that the sponsors would otherwise have to make. These transactions include full-service hotel acquisitions, redevelopment and Property Improvement Plan (PIP) financing. It is typical for a mezzanine loan to be co-terminus with the senior debt. Pricing of these financing vehicles varies and is based on the risk associated with the transaction. Our experienced team can navigate you through the mezzanine financing process and provide you with a customized solution for your next hotel project.
DISCOUNTED PAY-OFF (DPO) FINANCING:
Up-To 90% LTV / Fixed or Floating Rate / Non-Recourse / Fast Closing / Interest-Only
It is not uncommon for commercial real estate lenders to offer borrowers an opportunity to pay the lender off at a discount. This practice allows lenders to raise capital to reposition their balance sheet and also offset any regulatory pressure that may exist. It may also reduce exposure in certain real estate markets or help eliminate risk related to underwater real estate assets.
This mechanism is called Discounted Pay-Off.
As a leading commercial mortgage brokerage and advisory firm, Integra offers clients a network of lenders who can provide up to 90% financing of the agreed upon pay-off amount. These arrangements are generally offered to borrowers who can close on the new loan quickly. We understand that it can be challenging to find a new lender to provide the necessary capital to pay off a legacy lender, both because the discounted loan payoff opportunity is likely only available for a short period of time, and also because there is generally institutional reluctance among banks and conventional lenders to help fix what is viewed as a competitor’s problem.
Integra’s valuable lender relationships allow investors to close on new a loan with attractive terms and conditions while meeting the investors desired objectives. The discounted pay-off of the old loan simultaneously reduces the debt burden on borrowers and lowers the monthly payment, generating additional cash flow to the borrower who can reinvest in the growth and expansion of the hotel.
SBA HOTEL LOAN PROGRAMS:
Small Business Administration – SBA 7(a) Loan
SBA 7(a) Loan is the most commonly used program for hotel acquisitions and refinance. The SBA 7(a) is ideal for first-time buyers or experienced hoteliers because it offers flexible terms and a low down payment requirement.
Loan Structure: Single loan This is a single permanent 25 year fully amortized loan with the SBA offering 75% guarantee to the lender reducing the lender’s risk exposure in financing riskier assets such as hotels specially at higher Loan to Values
Financing Purpose: Acquisition, Refinance & Construction The 7(a) loans can be used for hotel acquisition, refinance, Property Improvement Plans (PIP), renovations and construction.
Maximum Loan Amount: Although the maximum loan is 5 million, it is possible to structure commercial loans along side of the 7a loan to increase the loan amount.
Loan to Value (LTV): Up to 85% For an expansion of business (if one has hotels and is buying another hotel in the same market), the maximum Loan to value is 85%. For a startup hotel (construction project) or purchase of a hotel in a new market, the maximum loan to value is 80%
Minimum DSCR (Debt Service Coverage Ratio): 1.25x Net Operating Income (before depreciation and interest) divided by the annual debt service should yield no less than 1.25x DSCR
Reserves: None. Lender does not escrow taxes and insurance. In addition, there is no requirement for an FF&E reserve.
Amortization / Term to Maturity: The 7(a) loans are fully-amortized (aka self-liquidating), 25-year term with a 25-year amortization schedule. Loan Prepayment: 3, 2, 1% The prepayment penalty is declining from 3% the first year, 2% the second year, and 1% the third year and open to prepayment at par thereafter.
Personal guarantee: This loan requires a personal guarantee from the borrower or any partner with 20% or more ownership.
Assumption: The 7(a) loans are assumable, however, the proposed buyer must be qualified and appoved.
BENEFITS OF THE 7(a) HOTEL LOANS:
- Short prepayment period
- High Loan to Value
- Assumption and transfer of ownership
- FF&E and PIP costs are included
- National coverage
- Refinance existing government loans
- Manageable costs
DRAWBACKS OF THE 7(a) HOTEL LOANS:
- High SBA guarantee fee
- Only for owner operators
- No cash-outs
- Loans to be refinanced must be in good standing
- Many policies and regulations
- Citizenship requirements
- Additional collateral may be required to achieve higher leverage
Integra Real Estate Capital maintains its unique relationships with core hotel lenders who provide non-recourse capital to investors and developers alike. We assist clients in obtaining competitive permanent, bridge and construction loans and negotiate aggressively on their behalf to achieve their investment property goals and objectives.
Speak to one of our professionals about your next project: (212) 353-2800
17 State Street, Ste 4000
New York, NY 10004
You can also email us for more information.
Integra provides its clients unique access to capital resources for acquisitions, refinance and redevelopment of commercial real estate across U.S. Below is a summary of our lender relationships:
- Insurance Companies
- Commercial Banks
- Wall St. Conduits (CMBS)
- Investment Banks
- Pension Funds
- Credit Unions
- Agency Lenders
- Private Equity
You can expect certainty of execution and a seamless closing process.
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Non-Recourse financing alternatives for other asset classes include:
- Mobile Home Parks
- Student Housing
- Affordable Housing
Hotel Financing is Our Business.
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WHY CHOOSE INTEGRA?
By electing to work with Integra, our clients gain access to:
- Higher Leverage (75% LTV)
- Longer Amortization (30-Years)
- Non-Recourse (with carve-outs)
- Flexible Underwriting
- Interest Only Options
- Longer Term
- Low Interest Rates
- Loans available in secondary and tertiary markets