Today's Hotelier - November 2017 - 50

LENDING

expected rate of return on a lender's
investment would be on day one, or its
debt yield. When income is less predictable, as in markets where cash flow is
less stable or for flags lower on the STR
chain scale, lenders raise their required
debt yield level, which reduces how
much you can borrow. You can expect

targets to range from 9 percent in primary markets for higher-end hotels,
to 10 percent to 12 percent in secondary and tertiary markets for select service hotels. Bottom line, the lower the
debt yield requirement, the higher the
loan amount. Your final loan amount,
however is still subject to the lender's

loan-to-value (LTV) cap which is usually
70 percent for select service hotels. Debt
yield and LTV are the main drivers for
leverage. As credit markets pull back
on hotel lending debt yield often rises
and LTVs drop.
With an NCF of $1,050,000, our example's $13,125,000 estimated value and
Debt Yield of 12 percent will garner a
maximum loan amount of $8,750,000.

TOTAL COST BASIS
IN THE PROPERTY

One PLANET

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Contact your local Territory Manager
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guestsupply.com * ©2017 Guest Supply®, a Sysco® Company

50  | NOVEMBER
876205_Guest.indd
1

2017 | TODAYSHOTELIER.COM

7/12/17 2:05 PM

Often overlooked, but important to credit
committees and bond market rating
agencies, is the total dollars invested for
construction or capital improvements
since the hotel was built or acquired.
Known as your hotel's total cost basis,
it is especially critical for a cash out
refinance as the new loan will be significantly higher than your current loan.
The longer you've owned the property,
the less important this factor.
Bottom line, to avoid missing out on
higher proceeds, do the math upfront
to ensure your numbers accurately
represent your hotel. Improve your
results even further by working with
an experienced intermediary who
understands the lender's thresholds
and knows how to negotiate around
potential shortfalls.
■
Rushi Shah is CEO
of Conlon Capital, a
commercial mortgage
banking firm formed
by a merger with
Aries Capital, which
specializes in CMBS and other
non-recourse lending solutions.
Over the past 26 years, the Conlon
and Aries teams have collectively
funded more than $8B for hotel,
multifamily and other commercial
properties. Shah held previous
positions at Northern Trust and is
a member of AAHOA's Founding &
Allied Member Committee. Shah
holds an MBA from The University of
Chicago's Booth School of Business.


http://www.guestsupply.com http://www.guestsupply.com http://www.TODAYSHOTELIER.COM

Table of Contents for the Digital Edition of Today's Hotelier - November 2017

Letter From the Chairman
Letter From the President & CEO
The Perfect Storm for Hotel Owners
Design That Brings People Together
New Brands Design for a New Kind of Hotel Experience
Time for a Group Sales Tune Up
AAHOA Interview
Marketing
Technology
Small Business
Finances
HR
AAHOA @ Industry Events
AAHOA Founding Members
AAHOA Vendor Partners
Classifieds
Advertiser Index
Today's Hotelier - November 2017 - intro
Today's Hotelier - November 2017 - cover1
Today's Hotelier - November 2017 - cover2
Today's Hotelier - November 2017 - 3
Today's Hotelier - November 2017 - 4
Today's Hotelier - November 2017 - 5
Today's Hotelier - November 2017 - 6
Today's Hotelier - November 2017 - 7
Today's Hotelier - November 2017 - 8
Today's Hotelier - November 2017 - 9
Today's Hotelier - November 2017 - Letter From the Chairman
Today's Hotelier - November 2017 - 11
Today's Hotelier - November 2017 - Letter From the President & CEO
Today's Hotelier - November 2017 - 13
Today's Hotelier - November 2017 - 14
Today's Hotelier - November 2017 - 15
Today's Hotelier - November 2017 - 16
Today's Hotelier - November 2017 - 17
Today's Hotelier - November 2017 - 18
Today's Hotelier - November 2017 - 19
Today's Hotelier - November 2017 - The Perfect Storm for Hotel Owners
Today's Hotelier - November 2017 - 21
Today's Hotelier - November 2017 - 22
Today's Hotelier - November 2017 - 23
Today's Hotelier - November 2017 - Design That Brings People Together
Today's Hotelier - November 2017 - 25
Today's Hotelier - November 2017 - 26
Today's Hotelier - November 2017 - 27
Today's Hotelier - November 2017 - New Brands Design for a New Kind of Hotel Experience
Today's Hotelier - November 2017 - 29
Today's Hotelier - November 2017 - 30
Today's Hotelier - November 2017 - 31
Today's Hotelier - November 2017 - Time for a Group Sales Tune Up
Today's Hotelier - November 2017 - 33
Today's Hotelier - November 2017 - 34
Today's Hotelier - November 2017 - 35
Today's Hotelier - November 2017 - 36
Today's Hotelier - November 2017 - 37
Today's Hotelier - November 2017 - AAHOA Interview
Today's Hotelier - November 2017 - 39
Today's Hotelier - November 2017 - Marketing
Today's Hotelier - November 2017 - 41
Today's Hotelier - November 2017 - 42
Today's Hotelier - November 2017 - 43
Today's Hotelier - November 2017 - Technology
Today's Hotelier - November 2017 - 45
Today's Hotelier - November 2017 - Small Business
Today's Hotelier - November 2017 - 47
Today's Hotelier - November 2017 - 48
Today's Hotelier - November 2017 - 49
Today's Hotelier - November 2017 - 50
Today's Hotelier - November 2017 - 51
Today's Hotelier - November 2017 - Finances
Today's Hotelier - November 2017 - 53
Today's Hotelier - November 2017 - 54
Today's Hotelier - November 2017 - 55
Today's Hotelier - November 2017 - HR
Today's Hotelier - November 2017 - 57
Today's Hotelier - November 2017 - AAHOA @ Industry Events
Today's Hotelier - November 2017 - 59
Today's Hotelier - November 2017 - AAHOA Founding Members
Today's Hotelier - November 2017 - 61
Today's Hotelier - November 2017 - AAHOA Vendor Partners
Today's Hotelier - November 2017 - 63
Today's Hotelier - November 2017 - 64
Today's Hotelier - November 2017 - 65
Today's Hotelier - November 2017 - 66
Today's Hotelier - November 2017 - 67
Today's Hotelier - November 2017 - 68
Today's Hotelier - November 2017 - 69
Today's Hotelier - November 2017 - 70
Today's Hotelier - November 2017 - Classifieds
Today's Hotelier - November 2017 - 72
Today's Hotelier - November 2017 - 73
Today's Hotelier - November 2017 - 74
Today's Hotelier - November 2017 - 75
Today's Hotelier - November 2017 - 76
Today's Hotelier - November 2017 - 77
Today's Hotelier - November 2017 - 78
Today's Hotelier - November 2017 - 79
Today's Hotelier - November 2017 - 80
Today's Hotelier - November 2017 - Advertiser Index
Today's Hotelier - November 2017 - 82
Today's Hotelier - November 2017 - cover3
Today's Hotelier - November 2017 - cover4
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