Category Archives: Closings

Baton Rouge bridge over river

Refinanced hotel in Louisiana: Timing a Refi

We recently closed a loan for a refinanced hotel. Our Louisiana clients own a profitable, healthy hotel. They purchased it as less experienced buyers, relying on a seller note at the time. Now they were ready to refinance this seller note. They had developed their management resumes and built up their credit. So they approached Senior Associate Ryan Dumas for advice and support.

Ryan Dumas worked with the clients to determine if now was the best time for a refinanced hotel loan. He understood their goals and their business vision. The clients wanted to have a more traditional loan and they wanted to disentangle themselves from the seller. Ryan stated, “We successfully closed this refinanced hotel loan. Their new loan is secure and guaranteed. Now my clients have a bank as a lender and not somebody from the community. They no longer have a lender relationship with the seller; they are just neighbors and colleagues.”

Is Now the Time for a Refinanced Hotel?

• Is your current note maturing? We receive many loan inquiries when current mortgages are maturing. As a note matures, either the entire balance has to be paid off or the loan has to be somehow modified or extended. Maturing notes require negotiation. For many business owners, a pending note maturity is a great date to refinance.

• Can you lower your mortgage payments or pay off your mortgage more quickly?  It is easy to determine if you can save money with a refinance. When we seek out loan offers from our network of lenders, they will provide the terms. These terms will dictate your monthly payments and how long it will take to pay off your loan. You can then determine what the best business decision is. There are closing costs associated with all loans. As a result, you will need to consider how long it will take for your lower payments to offset those costs.

• Are you looking to change your lender? Some clients are interested in developing a new business relationship with a prospective lender. Other clients, like our Louisiana ones, simply wanted to extricate themselves from a loan that felt a little too personal. This can be the case with private notes, especially ones that are held by family or community members.

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.

Texas RV Park Purchase and Upgrade

GRP Capital is pleased to announce a new loan for the purchase and upgrade of an RV park. This facility is located in Southeast Texas.

Our GRP Capital team worked closely with his client, helping to facilitate the financing. Managing Director Krishan Patel said, “The borrowers were great to work with. They are experienced in this sector. With this purchase, we are helping them expand their portfolio. Our entire GRP Capital team consulted with the clients. We worked diligently to steer them towards a loan that matched their financing needs. Even better, we are making plans for the clients’ next acquisition.”

Why an RV Park is a Great Investment:

• Current Travel Trends: Tourism trends in the United State are favorable for RV park usage. Americans are favoring driving over flying and are anxious to arrive at far-flung destinations.

• Pandemic-Proof: Travel in a recreational vehicle or camper and lodging at an RV park make sense during our new normal. An RV park allows for sociability outside, while protecting vulnerable people from overexposure.

•  More opportunities for market penetration : While there are multiple hotels at many highway exits, this sector is not as crowded. An RV park with updated amenities can capture market share. This requires effective marketing, excellent management and maintenance and good decisions on what amenities drive occupancy.

•  Lenders Like RV Parks : Lenders, particularly SBA lenders, look favorably on this sector of hospitality lending. As a result, GRP Capital can find matches for qualified 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.

Texas Hotel Owner Closes High Leverage Loan

Our clients already owned a Texas hotel. They were ready to purchase another Texas hotel in the northwest part of the state.

They really wanted to minimize their equity injection.

Each of our clients have different needs. Some are more rate-sensitive, some clients want loans with lenders who will become their primary business relationship. And some, like these clients, are looking for a high leverage loan.

Our GRP Capital Team worked closely with the clients. Managing Director Krishan Patel noted that he was proud of the sensitive guidance during the negotiations of the purchase and sale agreement. He also helped his clients prioritize the aspects of the new loan that were most important to them. “I was pleased that we were able to match these clients with a loan that met their needs. They have great experience in the hospitality industry. As a result, they will maximize the profit of their new hotel. Their ability to keep their equity injection manageable was a critical component of the loan. I look forward to working on other projects with them, as I know their situation and goals well.”

Best Practices for Organizing Your Equity Injection:

During underwriting, the clients worked quickly to provide evidence of their equity injection. The equity injection is the “money down”. If you are contemplating a new loan (not a refinance), here are some tips regarding equity injections.

• Sufficient equity: The lender will require bank statements or statements from stock accounts. These statements must show enough money. Just before closing, clients transfer these funds via wire.

• Dividing it Up: Typically, all of the partners participate in putting money down. Ideally, the equity injection is divided up proportionally among the partners. Most buyers contribute towards the down payment, matching the percentages of ownership.

•  Clean sources of equity : Down payments need to consist of funds that are “clean”. This means that the money has not been recently loaned to you. As you are choosing which accounts will be the source of your equity injection, choose wisely. The lender will “source” any large movements of money into an account (typically more than $1,000). This means you will have to tell the lender where the money came from and often provide a statement (or several) from the source of the transfer.

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.

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.

Fast closing to meet a 1031 Exchange Deadline

GRP Capital was happy to help our Florida client purchase a new hotel, using his proceeds from a previous sale. But even more importantly, our client had an imminent 1031 exchange deadline, so he had to use the proceeds quickly. 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.

GRP Capital President Rick Patel and our entire team worked closely with our client, under the added pressure of the 1031 exchange deadline.  

The biggest hurdles were shepherding the loan through the underwriting process, quickly obtaining a survey and working with the franchise team. It was hard work! Rick Patel remarked, “We utilized a third party consulting team to work with the franchise. We had to do this to overcome the mandatory 14 day cooling off period to meet the borrower’s 1031 exchange deadline. In-house, we worked diligently to submit all the required documents quickly and correctly. Timing was absolutely critical for this loan. It was an all hands on deck effort, which we were happy to do for this client.”

What to do if you have a 1031 Exchange Deadline:

• 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 deadline.

• 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, If you know you will be applying for a loan with a tight deadline. Make sure you have your docs in a row.

• 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 team specializes in finding the right lender for each project. We save our clients time and provide options, as we research different funding sources. Our experience allows our clients to choose the best loan for them. If you are considering a purchase or a refinance, let us know how our GRP Capital team can be of service.

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.

Setting goals to achieve results: new loan in California

Setting goals is an important part of of being a successful businessperson. For many of our clients, their objectives include adding new businesses to their portfolio, expanding or remodeling, or refinancing current loans to improve cash flow. Setting goals helps you see where you are heading. While you are are setting goals, GRP Capital can then help determine the steps you need to realize your dreams.

GRP Capital’s  Senior Associate Ryan Dumas and our entire team were able to close a California hotel loan. Our client came to Ryan a while ago and he wasn’t quite ready to take on a new loan, but he needed financing to replace a private loan he was currently paying off. Ryan and the entire GRP team worked closely with him to structure his loan and to help him improve his financial picture. By setting a goal of improving his books, our GRP team could find more willing lenders from our network. The client had in his favor a solid and profitable hotel in a busy market. He and his management team are hands-on with their property. And most importantly, everybody had their eyes on the prize: closing that loan.

On the day the loan closed, our client posted pictures of a celebratory outdoor dinner with friends and business partners. With smiling faces, he also tagged GRP Capital, praised Ryan and the rest of our team, saying “You Rock!” and “We highly recommend u!”

Ryan Dumas remarked, “This client is our bread and butter at GRP Capital. He knows his business, he is a small businessman who just needed guidance and personal attention. We even helped him with some legal and title issues when those threatened to slow down the loan process. I know he and his team will continue to be profitable at this property.”

Setting Goals for Your Business:

• Improving Cash Flow. Ryan and the rest of the team can help you truly understand the financial picture of your business. We can often suggest ways  ways to minimize or eliminate expenses? Are there actions you can be taking to increasing your revenue? GRP Capital can help you take advantage of tax laws to minimize your tax exposure while still demonstrating the health of your business.

• Comparing Loan Products: The right loan can often bring down your monthly payments. Loans can also provide more permanent, reliable financing, especially if you are facing a balloon payment. Our GRP Capital team can discuss the variety of loans out there and help you choose from various lenders to secure the loan that most closely matches your goals.

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.