Category Archives: Case Studies

From Renting to Owning: Client Now Owns his Office Space

Many of our small business owners want to move from renting to owning. We think, if it is affordable, now might be the time to make that decision. Rental prices for commercially leased properties are moving up in many markets. Transforming from renting to owning allows you to control your bottom line. Your mortgage payments will remain relatively constant, depending on the terms.

Our client was renting his suburban Dallas office space. He was ready to make the move from renting to owning. However, he had never purchased commercial real estate. Our team, along with Business Associate Niraj Zaveri, worked closely with him to make the process as transparent and smooth as possible.

Is this the time to move from Renting to Owning?  

• Lease payments vs. mortgage payments : We will help you compare what you currently pay in leases to what your potential mortgage payments might be. GRP Capital finds a variety of lenders and presents clients with several different options for financing. Clients can then compare all of the aspects of these term sheets before making a decision. We help crunch the numbers so you can determine what is best for you. We will also try to forecast what your future lease rates would be if you continue to rent. Will you have additional space to rent? If so, we will help you determine a reasonable market rate for that income.

•  How Long will you be occupying the space?: Changing office locations can be disruptive to your core business. In addition, making plans to “flip” office space may not make sense in every situation. If you are planning to stay in the office for a while, you will realize greater financial stability. This gives time for the start up costs and any equity injection to be offset by lower payments.

•  What do you have in Place to be an Owner? When you become the owner of your office space, you will have more responsibilities. These include taxes and insurance, but also maintenance and upkeep. Do you have the time to take on these additional responsibilities or have you created a team to take these on? Ownership should allow you to take control of your office space and your payments, without taking you away from running your business.

Niraj Zaveri on closing this loan stated, “I was thankful that my client could work with the experienced GRP Capital team. He was nervous as a first time commercial real estate owner, but we were able to guide him from receiving term sheets to closing and funding his loan.“

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. If you are considering becoming a first-time (or second or third time!) buyer or refinancing a current loan, we can assist you.

Tip for smooth closing: partner with professionals

Everybody wants a smooth closing, including our GRP Capital team! GRP Capital recently closed a loan for a purchase of an 86 unit franchised hotel on the west coast of Florida. GRP Capital Managing Director Krishan Patel as well as GRP Capital President Rick Patel worked closely with our client. They also worked with his team of highly competent and trusted professionals. As a result, we closed quickly and without too many hiccups.  

Smooth Closing: How we can partner with your professionals: 

• Accurate and Appropriate Financials : While many small business owners prepare their own financials, lenders prefer professionally prepared financials. For this loan, we worked carefully with our client’s CPA. Together we analyzed the financials of the hotel being purchased. We also pre-underwrote the financials of various businesses owned by our client. We wanted to show the lender the true potential revenue value of the hotel. In addition, we demonstrated the ability of our borrower to make payments on a new loan.

•  Saving Our Clients Time: The lender requested many documents. Being able to work directly with the CPA allowed our client to run his businesses. Furthermore, he trusted us and his CPA to work on his behalf. As a result, he didn’t have to be involved in every email or conversation.

•  Excellent Attorneys Make for Excellent Closings:  We notice that having a trusted attorney at closing makes a difference. They look out for our clients’ interest and are able to amend documents quickly. If necessary, they can run title and even escrow funds. We recommend that all of our clients engage an attorney. Clients are often spending a lot of money when seeking financing. Paying for an attorney is an investment towards a smooth closing and protects client’s interests.

Rick Patel upon closing this loan stated, “We know this client well and have worked with his professional team, too. They are very responsive to our phone calls and e-mails not just from me, but from Keren Alpert, our loan processor, too. As a result, our client trusts that we are doing the work in the background, so he can run his business.“

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. If you are considering becoming a first-time (or second or third time!) buyer or refinancing a current loan, we can assist you.

Independent Texas Hotel Loan Closes

Our clients were ready to purchase a small, but profitable independent Texas hotel. It was adjacent to another franchised hotel, which they were also in the process of purchasing.

GRP Capital worked closely with the buyers and sellers. We paid particular attention to the specialization required to obtain loans for independent properties.

Senior Associate Ryan Dumas was pleased to close the loan. He remarked, “This independent Texas hotel is perfect for creating two market price points for my clients. The loan is affordable and stable and will allow them to continue the profitability of the current hotel.”

Special considerations regarding Independent Hotels:

• Hotel statistics . Franchised hotels utilize reservation and check-in systems that generate hotel statistics. These statistics include occupancy, ADR (average daily rate) and RevPAR (Revenue per available room). Independent hotel operators may or may not utilize sophisticated programs. Thus, generating this important information (needed by both lenders and appraisers) can be a challenge.

• Sales and Occupancy Tax Records Required:  Most independent hotels do not participate in STR reporting. In addition, they are not using franchise check-in software. As a result, it can can be difficult to ascertain their revenues and profitability. Lenders and appraisers will accept two different third party reports: either business bank statements or sales tax receipts that show the revenue basis of monthly occupancy taxes. Sellers of independent hotels should be prepared to provide one of these sets of documents.

• Financials. It’s our job at GRP Capital to comb through seller financials. We want to make sure they match up with the hotel statistics and the taxes. Then we can provide a very clear picture to lenders and appraisers. We want all of the stakeholders to understand the current profitability of a property and its potential.

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, 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.

GRP Closes Liquor Store Loan in Arizona

GRP Capital is pleased to announce the successful closing of a liquor store in Arizona. Both Ryan Dumas and Vijal Suthar worked closely with our clients to close this loan. 

GRP Capital secured a fully amortized, 25-year permanent loan for the borrower. The loan closed with additional working capital in addition to covering all closing costs. 

Associate Vijal Suthar noted, “Our clients benefited a lot, because we already knew their business situation well. We had previously helped them apply for SBA emergency loans for their various businesses, loans that became available through the CARES ACT. As a result, we understood their situation, including some distinct complexities.”  Ryan Dumas added, “This new loan not only brought down our clients’ monthly payments, it also saved them six months of payments. Because we were able to close the loan prior to the SBA deadline of September 27th, the SBA pays for six full months of loan payments.”

Lenders are eager to fund liquor store loans, both purchases and refinancing. Liquor stores have continued to be profitable throughout the pandemic. They have required only modest modifications to assure the health of customers and employees. Most importantly, liquor stores have not experienced significant losses of revenue during the recent pandemic and many have actually increased their revenues, due to the limits and closures of bars and restaurants.

The GRP Capital team specializes in finding the right lender for each project. We save our clients time and provide options, as we research and apply for different funding sources. Our experience allows our clients to execute on funding within our proven lending network.

Closing this loan demonstrates GRP’s ability to secure funding for business owners in expansion even in these uncertain economic times. To be sure, business conditions are experiencing a “new normal”. However, business loans post-COVID 19 are possible under the right conditions.

Selling to the Next Generation

Sometimes in the business world, especially a family owned business, owners decide it is time for selling to the next generation.

The GRP Capital team worked hard with our clients to help them purchase this Florida hotel from their relatives. The price was very good, as is often the case in “arms length transactions”. Our clients are now ready to take over the full management of the property and reap all the revenues. The new owners are excited to do so, just in time for increased American travel.

Reasons for Selling to the Next Generation: 

• Current Owners wish to step back: The opportunity for selling to the next generation can be quite tempting. In doing so, the current owners can shed the responsibility of day-to-day management and operation. At the same, time, they also ensure that their younger family members have a path to accrue capital and credit.

• Younger Generation Exhibits Ability to Take Over Successfully: The younger generation is often quite adept at taking over the reins of leadership in their family businesses. Prior to the transfer, these younger owners need to accrue the required equity injection and develop a favorable credit rating. They need to be skilled, albeit young managers.

•  Selling to the next Generation Allows for Changes: Sometimes managers and owners need to make changes in order to increase revenue and hold down costs. These changes can be difficult for the older generation to take on. Examples of these innovations include updated software to track purchases and vendors, payroll systems, marketing campaigns and networking with the next generation.

Creating a Path Towards New Ownership:

Managing Partner Krishan Patel stated, “I was happy to help these clients transfer this hotel to the next generation. The younger family members are already highly skilled in accounting and hotel management. This property made it through COVID-19 and promises to provide good cash flow under their leadership.”

This loan took a bit of extra work to close. The loan process started before the pandemic and was paused by the lender. But there was a silver lining.  Due to the delay, our client was able to take advantage of the latest stimulus package. GRP Capital worked in tandem with the lender to see the loan through to closing, including underwriting the many other businesses owned by the client borrowers.

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

SpringHill Suites in Texas Loan closes

GRP Capital is pleased to announce the loan closing for a SpringHill Suites by Marriott in south Texas.  A SpringHill Suites property is classified as an upper midscale chain by Smith Travel Research (STR). GRP Capital Managing Director Krishan Patel as well as GRP Capital President Rick Patel worked closely with the multiple partners, part of a syndicate who purchased the Texas hotel.  

Challenges and Strengths of a Syndicate Purchase: 

• Lots of moving parts: A syndicate purchase has many owners, and their percentage of ownership can vary. All lenders require at least some information on the members of the syndicate. Our dedicated loan processing department takes care of these details.

•  Working with Key Players: Because the partnership group was large, it was important to designate key players. The key players for this Springhill Suites received all of the emails from GRP Capital and then coordinated with their other partners when necessary. This kept the lines of communication clear and as simple as possible. And it worked!

•  Spreading Risk:  Syndicate purchases allow the risk of new businesses to be borne by a larger group of people. Syndicates can also mix experienced owners with new investors.

Krishan Patel upon closing this loan stated, “Closing this loan was very important to our clients. They were ready to enter this Texas market and had experience in the upper midscale niche of the hospitality industry. The partnership group was large, but the key players were organized and motivated and we enjoyed getting to know them.”  

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Fairfield Inn Refinance Closes

GRP Capital is pleased to announce the loan closing for a Fairfield Inn & Suites by Marriott in Southwest Florida. A Fairfield Inn & Suites property is classified as an upper midscale chain by Smith Travel Research (STR). Since the beginning of the COVID-19 pandemic, lenders have shown greater interest in budget properties. Therefore, closing this loan indicates that the lending market is widening. GRP Capital Managing Director Krishan Patel as well as GRP Capital President Rick Patel worked closely with the multiple partners and the lender to secure this complex, high value loan for our clients. 

Challenges and Strengths of an Upper Midscale Property: 

• Finding the correct pricing: A property like a Fairfield Inn & Suites competes among a larger spread. They compete with both the top and bottom echelon of properties. They have to find a way to price themselves to achieve solid ADR and occupancy, which requires constant attention to rates.

•  Proving value to the customers: Upper midscale properties, including this Fairfield Inn & Suites, have had to make changes during the pandemic. Some areas that required changes? A serve yourself breakfast buffet, open coffee areas in the atrium and even daily housekeeping duties.

•  Solid Management Practices:  Hotels that are in the upper midscale range typically face higher maintenance expenses and also multiple potential revenue sources, like meetings and conferences. It is critical for hands-on management to monitor expenses and capitalize on revenue potential.

Krishan Patel upon closing this loan stated, “Closing this loan was very important to our clients. They had kept the hotel functioning during the hard times of 2020 and 2021, but needed permanent financing ahead of a loan maturity. The partnership group was large and was comprised of very experienced investors and hoteliers, all of whom had input into the decision. Our job was to help organize the process, while allowing all of the partners to feel included in the closing.” 

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Denny’s in California: Business and Real Estate Loan Closes

Business loans that combine business and real estate are attractive to lenders. GRP Capital Managing Director  Krishan Patel  led the team that closed this southern California restaurant loan.

Why Lenders Prefer Loans that Combine Business and Real Estate:

• One Word: Collateral Loans that combine business and real estate have significant collateral, which gird the deal. Many businesses can have ups and downs, especially as the pandemic continues to evolve. Very few businesses are immune from these economic vagaries. However, real estate tends to be more stable.

•  SBA Guaranty: Small Business Administration (SBA) loans are dominating certain business sectors. These include most hospitality loans. As an added incentive, SBA also shows preference for loans that combine business and real estate.

Clients Were New to SBA: 

Patel remarked: Our clients came to us after listening to our remarks at the AAHOA webinar following the passage of the original SBA stimulus package. Our clients, despite being very experienced entrepreneurs, had never utilized SBA for their funding needs. They were eager, however, to secure a government guaranteed loan. In addition, they were looking to establish a new banking relationship. We knew just the lender for them, one that has found great success in closing SBA loans and was also nearby. Our clients were pleased with the results and told us “they appreciated our assistance in expediting this transaction.” 

GRP Capital secured a fully amortized, 25-year permanent loan with low interest rates.  The owners were able to lower their monthly mortgage. In addition, they benefited from a reduced mortgage payment for the first few months as part of the latest stimulus package. 

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

GRP client buys La Quinta from large corporate seller

GRP Capital is pleased to announce the purchase of a La Quinta Inn & Suites in Southwest Florida from a large corporate seller. GRP Capital continues to help other qualified buyers who are purchasing La Quinta’s across the nation!

Krishan Patel , GRP Capital Managing Director, was pleased to close this loan. He stated, “This corporate seller has been in the news for their sales of multiple hotel properties. They have a very particular way of doing business. We were able to work closely with their representatives. As a result, our clients took possession of their hotel. They complimented us on the smooth and speedy closing. We are ready to assist other clients who see these assets on the market and are ready to add them to their portfolio.” 

Tips for Purchasing Property from a Large Corporate Seller: 

• Do your due diligence:  Research the property, its profitability and its market share. Try to ascertain why the corporation is putting the property on the market. If you can, utilize published corporate documents. Try to determine if there are any significant issues that brought these properties to the cutting board.

•  Be Organized and Focused: Prepare yourself for the sale, even before you extend an offer.  Your personal and business financials should be in good order. File your taxes or request an extension. Demonstrate with appropriate documents how you will pay for the property with bank statements that show you have the funding on hand. Sometimes, large corporate sellers have a strict timeframe to closing, so any delays on your part could be costly.

•  Gather Your Professional Team: GRP Capital will help you by finding the right lender match. Of course, we will work directly with them and the corporate seller. At the same time, you’ll need to have strong support from your attorney, your accountant as well as trusted insurance and title professionals.

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Partnership Loan: Complex but Closed!

A partnership loan is very common. A partnership loan allows its members to pool their resources and talents to divide up the costs and responsibilities of a new business endeavor. GRP Capital is pleased to announce that Managing Director  Krishan Patel has just closed a loan on a large partnership for a new property in New Mexico.

While a partnership loan may be common, it can make a closing more complicated.

Typical complications in partnership commercial real estate transactions:

• Who will be officially managing the business? For this deal, two of the six partners agreed to be the managers. Their operation agreement clearly stated this setup. At signing, only the managers had to sign the full loan documents, while the other partners just had to sign guaranty paperwork. We even arranged for out of state signings.

•  How will equity injection be handled? For this loan, the partners were extremely organized about getting bank statements that were clean (free of large hard-to-trace deposits in the last three months) and using those to contribute their equity. It is very important for partners to be transparent with each other about their sources of equity. They need to be sure that their equity contributions  will be be acceptable to the lender.

How We Knew this was a Good Partnership:

Patel remarked, “I was very pleased to get to know this group of motivated, bright entrepreneurs. To be sure, they had carefully thought through many aspects of their purchase. Consequently, they contacted us to take this loan from letter of intent to closing as smoothly as possible. In order to meet their needs, we communicated with them regularly and they appreciated the transparency of the loan operations. They were model clients: organized and responsive.” 

GRP Capital secured a fully amortized, 25-year permanent loan with historically low interest rates.  The partners took possession of the property and are ready to make this business even more profitable in the future. In addition, the partners are able to benefit from a lowered mortgage payment for the first few months as part of the latest stimulus package. 

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.