Category Archives: Case Studies

Blueprint for hotel construction loan

Hotel Construction Loan Closes

Hotel construction loans can be complicated. And our Florida clients’ hotel construction loan had hit some roadblocks.

They were busily building a Fairfield Inn, working closely with their general contractor (GC). They had secured an original construction loan to cover the earliest costs of the project. However, their lender ended up not renewing their loan in the midst of the construction process.

Our clients were in a pickle: they were mid-construction but without secure financing. They come to GRP Capital for our advice and for stable lending. We were very pleased to secure permanent funding and they are on target to welcome guests in the very near future.

Rick Patel, GRP Capital President reflected on the loan closing, stating, “We really wanted to help these clients. They know the hospitality market and were well capitalized for this large construction project. They had just experienced a lender drop-off during a critical time. As a result, this could have been an anxious time. Instead, we all worked steadily as a team through a number of issues. We always had faith in our clients and their vision for this Fairfield construction. And we believe we conveyed that story to the lenders, too. Ultimately, I was proud of the client partners and our GRP Capital team.”

Hotel Construction Loans Basics:

• Do your due diligence on a general contractor There is no more important person during the construction process than your GC. Make sure your GC has done a similar project and that they have gone through a lender approval process. Your GC manages every aspect of construction, from hiring subcontractors and staying on top of permitting. Even more importantly, your GC is in charge of producing and maintaining a budget and a an up-to-date log of all costs incurred.

• Engage a knowledgeable attorney: Construction costs can be high. Nevertheless, don’t try to save money by not engaging a knowledgeable attorney early in the process. Expert legal help from the beginning can save you time and money as you get closer to closing. Your lawyer can help guide you through the regulatory maze and also work to mitigate risks in case of disputes and other issues.

• Keep meticulous records on ongoing expenses: Construction loans are a moving target, especially if money is already being spent. Lenders want to reimburse their clients for genuine expenses, but need the expenses organized in specific ways. Your GC and the lender will be collaborating on this. Again, a GC with good interpersonal skills is an asset in this phase, too.

• Don’t start work until you have permits: Clients often get quite excited with a new construction project and want to break ground as soon as the ink is dry on the land purchase. We cannot emphasize enough the important of first obtaining permits. Your attorney and your GC should know the local landscape, in terms of permitting authorities. Take the time now, so everything is above board or you may have early unnecessary costs that you cannot recoup.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals. We even have experience with lender dropouts and critically timed funding needs.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

Beach seen through a drop of water

Complex South Florida Hotel Loan Closed

Our client partnership group needed a Florida hotel loan. They were ready to purchase an underperforming hotel in South Florida. The hotel showed potential for growth, particularly with our partners’ plans to be hands-on right away. Currently, the hotel was owned by remote partners.

Krishan Patel, Managing Director of GRP Capital stated, “This partnership group consisted of a management team who were ready to enter the Florida market for the first time. The Florida hotel loan marketplace is complex and the lender pool has narrowed. We were able to secure competitive financing, requiring strategic structuring of the partnership. Our guidance was key to ensuring there was SBA eligibility, which is often critical in Florida hotel loans, especially in the mid-scale and economy sectors.”

The entire GRP Capital team worked together on all of the components of this loan. We even made sure one of the partners was able to sign his documents, while traveling on a ship!

Florida Hotel Loan FAQ’s:

• What should I do about insurance while I’m looking for financing? If you’re refinancing, just inform your agent that you’ll need updated insurance certificates. If you are purchasing a new property, start getting insurance quotes ASAP, especially if a lender is requiring flood and/or wind coverage. These extra coverages can take more time to procure. If you don’t have an agent, you can ask the seller if they are satisfied with their insurance agent. That person knows the property already. We also keep an updated list of trusted agents in our database.

• How come my own local bank won’t just loan me the money? This happens a lot! Different lenders have different interests for a variety of loans! We know our lender network well. That means we know who is interested in hospitality loans and who is not. That saves you time and money.

• Why should I consider an SBA loan?:  Small Business Administration (SBA) loans are often the best matches for certain hotel properties. The SBA is willing to guarantee a larger variety of hospitality loans, including economy and mid-scale properties.

• What about Hotel Statistics? The Florida marketplace is diverse with certain areas performing better than others. Accurate hotel statistics, through STR reports, financials and occupancy tax records are critical. These documents provide the fullest picture of the hotel’s revenue. As a result, the lender can feel more comfortable in underwriting and approving the loan.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

Home 2 Suites Closes with Non-Recourse Loan

We matched our Texas clients with a non-recourse loan. They were ready to purchase a Home2 Suites by Hilton, a mid-scale extended stay property.

This hotel is unique, because it is an extended stay mid-scale brand. The clients, experienced hoteliers, worked with GRP Capital to structure a somewhat complex loan.

Complex loans can be the right fix in certain situations. But you need the right team in your corner to handle all of the components.

Components of this Loan Included:

• Non-recourse. A non-recourse loan was the best match for our clients due to the complex ownership structure. This type of loan limits the sponsor’s contingent liability.

• Syndication. Our clients pooled their investment by syndicating their ownership via a GP/LP (General Partner/Limited Partner) structure. By utilizing syndication, our clients were able to amass the required equity injection.

• CMBS:  CMBS stands for commercial mortgaged-backed security. Non-recourse loans are typically CMBS-based.

Rick Patel, GRP Capital President, commented, “This loan showcased our GRP Capital teams’s ability to handle and close complex loans. We worked very diligently with the lender and the clients and all of their professionals, including lots of attorneys. With the complex GP/LP structure, we had to work very closely with all of the parties. We provided many hours of collaboration and consultation to take this loan across the finish line.”

What to Know about Non-Recourse Loans:

• What does Non-Recourse Mean? Non-recourse means that the lender’s recovery is limited to the collateral securing the loan and guarantees. Bad boy carveouts are provisions of these loans. Essentially, if the borrower is negligent or misrepresents themselves, the loan automatically becomes a recourse loan.

• What are the Main Advantages? These loans are great for partner groups, particularly syndicates. This is because each investor has limited liability.

• How are Non-Recourse Loans Priced?  Non-recourse loans are competitively priced, compared to SBA and conventional loans.

• Sophisticated Buyers Needed. The lender is taking on greater risks with this type of loan. Therefore, they expect strong borrowers. Their credit history should be excellent. Even more importantly, the borrowers need to have a viable detailed business plan.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

McKinney, Texas Success Story: High Growth Market Opportunities

At GRP Capital, we take pride in helping our clients turn their business visions into reality. Recently, we had the pleasure of working with experienced entrepreneurs ready to leverage their hospitality expertise in McKinney, Texas—a rapidly growing city with immense potential.

Located just north of Dallas, McKinney stands out as a unique and thriving location. McKinney’s population has doubled in the past 20 years, far outpacing many other metropolitan areas. McKinney offers significant opportunities for businesses looking to grow. This is due to its proximity to a major urban area combined with its strong local economy.

Our clients identified an upper midscale hotel property in this high-growth area and envisioned taking over operations through a turnkey transaction. Their plan included reflagging the property and driving revenue growth almost immediately.

Rick Patel, GRP Capital President, commented, “These clients were motivated and had done extensive research on the McKinney market and this specific property. The deal was complex but our lender network and the SBA were equally enthusiastic about funding a project in such a dynamic area. Ultimately, we secured funding through the SBA 504 program. This loan offers competitive rates and long-term stability for projects like this.”

How to Identify High-Growth Markets Like McKinney:

• Analyze recent and historical trends. Study population growth, housing trends and employment opportunities in the area. Is the region expanding or stabilizing? For hospitality businesses, consider whether the local demographics support activities like sports tournaments or large group events. Look for nearby attractions that could drive additional traffic to your business.

• Assess Business-Friendliness. Investigate how supportive the local government is to new business ventures. Are business licenses easy to obtain? What zoning restrictions might you face? A business-friendly environment can significantly impact your ability to operate efficiently.

• Evaluate Workforce Availability:  Hiring and retaining quality employees is essential for success. Ensure that there is an adequate local labor pool to meet your staffing needs. Additionally, consider whether hourly workers to live nearby or if long commutes might pose a challenge.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

If you’re ready to explore opportunities in high growth markets like McKinney or anywhere else, our team is her to help you achieve your business goals.

State Flag of Florida; we specialize in Florida hospitality

Capitalizing on Florida Hospitality with GRP Capital

At GRP Capital, we specialize in helping businesses thrive in the dynamic Florida hospitality market. While we are a national company with a track record of closing loans across the United States, our expertise in Florida’s hospitality sector sets us apart. We understand the unique nuances of this diverse market and are proud to support entrepreneurs pursuing success in Florida’s booming hospitality industry.

Recently, we had the privilege of assisting a client who was ready to make his mark in the Florida hospitality scene. With prior experience managing multi-family residential properties up north, he sought to transition into hotel ownership in Florida. His goal? To combine his operational expertise with his love for the Sunshine State.

Krishan Patel, GRP Capital Managing Director, reflected on the partnership:

“We love working with clients who bring strong skills from other industries and are eager to apply them to new ventures. This client was organized, well-capitalized, and determined. He had done his homework and was ready to embrace the challenges of entering a new business.”

The GRP Capital team guided him through the complexities of securing a hospitality loan. These included connecting him with a lender and a network of other professionals like surveyors and title officers was also helpful. Today he is successfully managing his independent East Coast hotel, just in time to profit from Florida’s high season.

Florida Hospitality Basics:

• Florida is many markets. Florida is a large, populous state. As a result, the marketplace is varied. Some lenders prefer coastal properties, while others focus on inland or independent businesses. Understanding these preferences is crucial for securing financing.

• Insurance Requires Planning  The insurance landscape in Florida can be challenging. Many lenders require wind coverage, which can be costly. Collaborate with a trusted insurance agent. Obtain accurate quotes and ensure that your business plan accounts for all insurance costs.

• Seasonality Matters:  Florida properties often experience pronounced high and low seasons. Some hotels rely on large group events during slower periods. Research your property’s market drivers, such as major clients or recurrent events to develop a realistic revenue strategy.

Our GRP Capital team specializes in finding tailored financing solutions for every project.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s how we add value:

  • We save you time by researching and identifying the best funding options for your unique project.
  • Our expertise spans various loan products—including SBA loans, bridge loans, and conventional financing—so you can navigate complex transactions confidently.
  • We provide guidance not only on lending but also on operational and strategic decisions that impact your business success.

If you’re considering becoming a first-time or repeat hotel owner in Florida or beyond, let’s discuss how we can help you achieve your business goals.

Collateral and a Central Florida Refinance

Collateral is an important part of many business loans. Your collateral “secures” your loan. It is the tangible “thing” that the bank knows has value.

Our Central Florida client was ready to refinance. Their business has been successful, with over a decade of stabilized income. The new loan was structured to free up capital for other business projects.

However, our client’s property, a waterfront hotel, consisted of multiple parcels. The hotel did not operate on every parcel, but they leased out other parcels, including a nearby boat dock. Even more significantly, their revenues included these lease payments.

Many lenders insist on including every single parcel in their loan, especially when those parcels are a revenue source. But including every single parcel in this collateral was not ideal. First of all, it would be complicated. Additional parcels mean additional title and survey work. And each parcel has to be appraised.

GRP Capital was able to work with our lender. We demonstrated that the hotel parcel alone had high value, enough to collateralize the loan. Working with our lender and building on the trust we had developed with them was crucial. It kept the loan as simple as possible and preserved our client’s collateral, too.

Collateral Basics:

• Your collateral will be appraised. An appraiser will determine the value of your collateral. This value has to meet or exceed the value of the loan.

• Collateral Shortfalls  Sometimes collateral values come up short. This happens. When it does, there are a few options. If this is an acquisition, the buyer may be able to renegotiate a discount on the sale price. Alternatively, borrowers can offer other assets as temporary collateral, while the loan is being paid down. Finally, some clients take out a small life insurance policy to obtain extra collateral.

• Consult experts before signing a PSA:  A PSA (Purchase Sale Agreement) makes assumptions about collateral. In addition, a PSA often requires “hard money”, a non-refundable amount. Therefore, if you can, contact GRP Capital prior to signing a PSA. We can save you money, especially if we believe the price is not going to be appraised to fully collateralize.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Refinance for cash out

Cash Out with a Refinance

Our client needed to pull cash out to upgrade their hospitality property but could not refinance due to the structure of their debt.

The amount they needed for their cash out was smaller than our typical loans. However, this was a repeat client who had approached us, seeking our counsel. Our management team looked carefully at all of their businesses and discovered a possibility. They owned an office building which was eligible for refinancing. There was even sufficient equity to pull out cash during the refinance.

Our client was pleased to close the loan and begin their upgrade.

GRP Capital is celebrating its tenth anniversary in 2024. This longevity has allowed to us to deepen our list of repeat customers. This benefits everybody.

Repeat Client Benefits:

• We know you! Our repeat clients are already “in the system”. We have their pertinent information, we understand the structures of their businesses, we even know who their team of professionals are. The “getting to know you” phase is already taken care of. We know what aspects of this process are easiest for you and your team and which present challenges at times. We are prepared for potential bumps in the road. Particularly with refinances and those with cash out components, this is critical.

• You Know Us!  Repeat clients know the “GRP Capital way”. You know how we match you with a lender, how we internally underwrite your file and how we process loans. There are no surprises as you already know how we communicate and the roles we have from business associates to credit analysis, from management to loan processing.

• We know your people:  If we have closed loans for you in the past, we may already have dealt with your attorney or your accountant. We already have emails for your insurance agent, your title agent and your franchise representative. Knowing how all of these professionals handle their business allows for seamless operations.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Cash out for refinance

1031 Exchange for New Florida Hotel Owner

Our Florida client came to us with a 1031 exchange.

The client was getting ready to sell a Georgia property. They were using the proceeds to purchase a new hotel in central Florida. To minimize their tax exposure, they were utilizing a 1031 exchange.

A 1031 exchange, also known as a like-kind exchange, is a real estate investing tool. It allows investors to swap out one investment property for another, deferring certain capital gains taxes. 

Our entire team worked closely with our client, always mindful of the 1031 exchange deadline.  He is now the proud owner of his hotel. He is very skilled at increasing profitability and is ready to take on the challenges of his new property. Our client was appreciative of the availability of the entire GRP Capital team, even exclaiming, “You always are there for me. I appreciate what you are doing.”

Tips for Handling a 1031 Exchange Deadline:

• Secure specialized help. Be sure your attorney has experience with 1031 purchases and sales. In addition, be careful when choosing a title company for the sale of your property. Be sure they have the ability to hold the proceeds in escrow as you wait for the purchase to go through.

• Know your deadline. Many business owners have their eye on purchasing a new property. Sometimes, they plan to sell another asset for their equity injection. That is a great plan. However, make sure the loan is feasible, and that a lender can close the loan to meet your 1031 exchange deadline. The SBA (Small Business Administration) is still a great resource for hotel loans, but be aware that SBA loans take a bit longer to close, especially 504 loans.

• Get all of your own financial documents ready:  Lenders will require taxes to be filed (or extensions), as well as financials that are less than 90 days old. Work with your accountant and other professionals and let them know your 1031 exchange deadline.

• Make it legal:  Work with your attorney so that your borrowing entity has an operating agreement or bylaws, is registered in the correct state and can be licensed correctly. 

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Florida Gas Station Loan Closes

Senior Associate Ryan Dumas is pleased to announce the closing of a loan for a gas station in central Florida. The loan funded at 86% LTV (loan to value), including inventory costs. These were very favorable terms, and we are proud of this high leverage loan. In addition, the interest rates were extremely competitive.

This loan closed, despite two hurricanes coming through the area. Fortunately, neither one materially affected the gas station.

Ryan had this to say about the deal, “We had a great team collaborating on this deal. My client was working with an experienced gas station broker and also a very responsive attorney. We were able to quickly get the documents needed from the sellers and the buyer. Therefore, our lender was motivated, too. As a result, the lender quickly approved and scheduled the closing. I hope we can work with lots of these guys again, as they are bright, experienced business people.”

How to Set Yourself Up for a Quick Closing

• Organized Documents: Sellers and buyers need to have their vital documents in tip-top shape. If you think a business loan is coming down the pike, gather your materials. Create your own personal financial statement. Organize documents about businesses you own, like tax returns and financials. Contact your accountant and get up-to-date financials on all your businesses, even if it is not your practice to receive monthly financials.

•Engage Professionals: Consult with an attorney and your accountant before making business decisions. Call our GRP Capital Team before you even sign a PSA. Ask your advisers, “Can I afford this? What is a reasonable price? Do you think the timing is good now?”

• Get insurance in place now: The commercial property insurance marketplace is very volatile right now. Start the process of finding insurance immediately and figure out if you can afford the costs. As soon as you can, obtain insurance certificates. Insurance issues are one of the prime reasons for delayed closing. Waiting to purchase insurance until the last minute usually backfires.

•Be Flexible: If a quick closing is a priority, be ready to pivot. If an appraisal comes in short, buyers and sellers may have to renegotiate. Sometimes we have to tweak the structure of the loan, especially for SBA approval.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance, purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Gulf Coast of Florida

Useful Advice for Gulf Coast Hotel Purchase

Working closely with the GRP Capital Team, our recurring client purchased a new Gulf Coast hotel.

This purchase did have a few roadblocks, which sometimes happens!

The buyers put down hard money when they signed a Purchase Sale Agreement (PSA). However, during the underwriting process, the appraised value came up short.

Rick Patel, GRP President, stated, “Lenders and appraisers are cautious right now, especially in the hospitality arena. It can be tricky to negotiate with a seller when an appraised value is below their expectations. They can have a fixed idea of what they think their property is worth. In this instance, we worked closely with the borrowers and the broker to bring the PSA in line with the market value. This had to be done in order to close the loan. Getting to closing required tact and finesse.”

Advice for When Appraisals Come in Low

• Prevention first! GRP Capital works closely with borrowers to make sure the loan is appraised to show the full value. This sometimes means working with accountants to recategorize expenses. It also means combing financials to find addbacks. Addbacks are current costs will not be borne by the new buyer. Finally, we work closely with the appraisers to make sure they have a clear picture of the revenue potential of the property.

•Renegotiate Purchase Price: Ultimately, lenders will not loan money which exceeds the value of the property. It is also unrealistic, costly and time consuming to try to find another lender and hope that they will raise the appraised value. So, once a buyer has received a lower appraised value, they need to return to the seller to discuss the issue. Hopefully, the seller will be reasonable. It’s critical that the seller understands that a new buyer is not going to repair this problem. Indeed, a new purchase price is the only fix.

• Make Sound Business Decisions: A lower appraised value should cause the buyer to consider the project in a new light. Why have market values come up short? Can the buyer manage the property more profitably or will they face the same issues as the seller? And if the seller refuses to budge on price, a strong business owner has to know when to walk away.

More Information on the Appraisal Process

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance, purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.