Hotel Finance Resource
Hotel Finance News
March 12th, 2007

Dear Lyman,

Welcome to Hotel Finance News.

Iím Lyman Aldrich, HFR's Senior Director of Real Estate Financing.

As experts in the field of hotel financing, we talk a lot about interest rates and how we can help you secure the right kind of funding for your project.

It's all true, but our client successes tell our story the best, so in this month's issue, we're giving you a real- life example of the kind of work we do and the results we get for clients every day.

Read "An Eye-opening Solution for a Skeptical Client" below.

Thank you for being a part of the HFR community!

Sincerely,
Lyman & Pete

in this issue
  • TCF Equipment Finance, Inc.
  • An Eye-opening Solution for a Skeptical Client
    by Lyman Aldrich
  • About Hotel Finance Resource

  • An Eye-opening Solution for a Skeptical Client
    by Lyman Aldrich
    Lyman Aldrich


    A prospective client approached me at a recent industry conference asking about market rates. He had 8 limited service hotels at the time (he now has 10) located in one state under various brand names.

    The client had just completed one hotel and was in the process of building another. He wanted to talk about a loan to pay off his local bank where all of his properties were financed.

    I explained my belief that each company should have a local lender but not to the exclusion of other lenders that can, in many cases, provide loans and services that the local lender cannot.

    I advised him that the lowest rates available at the time were conduit loans for properties with at least 12 months of operations. The client was skeptical coming from a small state that doesnít get much attention from national sources, but I had a good feeling and persuaded him to go forward to find out what the market might offer.

    Note on using a smaller bank exclusively:

    • Whenever the economy begins to decline, many small banks quickly get out of the hotel financing market sometimes leaving the client with no way to finance expansion if the opportunity presents itself.
    • Smaller banks often have limits on how much they can finance in hotels for one customer.

    I performed all of the due diligence and data collection on his newest properties and the remaining 6 hotels. He was in good shape with well-run, profitable properties and low loan-to-cost ratios.

    HFR takes a consultantís approach to meet our clientís needs, so I researched several lenders that I thought would be most appropriate for the client. In doing so, I am looking for several different ways to provide the financing. If successful, then one or more of these can be used.

    Next, I narrowed our lender selection down to the 4 lenders with the best options, presented the client data to the 4 lenders and got 6 different proposals back.

    The Result?

    • The client could, indeed, use a national or regional bank (vs. being tied solely to a local bank) to finance the construction of his properties. This gave the client an alternative to his ďone bankĒ approach.
    • I was able to find financing sources to finance the clientís just completed hotel
    • I delivered 2 fixed-rate proposals and 2 floating proposals on the just completed hotel at rates in the low 7's
    • And, I was able to find sources that could finance the portfolio of seasoned properties
    • I found a sizeable bank to look at financing several of his other properties and as well as the construction of his next properties.
    • I found a large conduit financing source that was interested in financing several of his existing properties at rates under 6%.

    And, each of these sources delivered interest rates that were from 1 to 2% lower than the local bank (the one incidentally that had all of the clients loan and deposit business).

    The local bank may have been offering all that it could, or may have been taking advantage of the client because he didnít know what was available in the market or how to go about finding other opportunities.

    Needless to say, this experience was a real eye-opener for the client.

    What HFR does is provide you with several solutions for you to accomplish your goals. We use our existing resources and experience in the market to do all the research for you. We only get paid out of the closings.

    Now what would interest savings of 1-2% mean to you? Ask us how we can help!

    Call me at (901) 854-6366 or email aldrich@hotelfinanceresource.com.


    About Hotel Finance Resource



    HFR has relationships with over 60 lenders nationwide to bring you the best solutions to your hotel financing needs.

    In the past 7 years, we have successfully completed over 2,200 hotel financing transactions closing loans totalling over $550 Million dollars.

    You can benefit from each of our three senior partnersí 30 years experience in hotel, real estate, equipment and general finance.

    Our depth of experience and our relationships make
    Hotel Finance Resource a company you can trust.

    Please call Pete or Lyman today at 901-854- 6366.


    TCF Equipment Finance, Inc.
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    If you have an interest in exploring leasing furniture, fixture, technology and equipment, please contact Dianne at 1-800 -442-7811 ext. 7447, email Dianne at dtetzlaff@tcfef.com.

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