Amount: $2,500,000
LTV: 47%
Lender: Credit Union
Location: Okanagan
Goals achieved: Greater flexibility, Additional leverage
Borrower: Holding company
A successful hotelier was in the midst of a substantial renovation to one of their recently acquired hotels. Unfortunately, during the lengthy construction period, renovation costs had increased beyond original projections. As a result, the client required additional financing to complete the renovation. Cost overruns are typically not supported by the construction lender with additional financing, and this case was no different.
The client reached out Lakepoint to assist. In addition to their hotel operations, the principal owned a portfolio of real estate assets, primarily land held for redevelopment. One of the assets owned was a vacant industrial property that was clear title, valued at approximately $5,300,000.
Lakepoint put together a comprehensive financing request that captured not just the vacant industrial parcel but also spoke to the principals track record as a successful, driven entrepreneur. Despite the general climate for land financing being very challenging at the time, Lakepoint was able to obtain multiple competitive offers.
Not everything went smoothly: during the underwriting process, the lender requested a consolidated P&L for all of the client’s companies and operating companies, including debt repayment across each, to ensure there was enough cash flow from operations to pay the bridge loan back at maturity.
Had an accounting firm been engaged to fulfill this request, a large and costly delay would have occurred. However, having multiple CPAs on the team, Lakepoint was able to create a consolidated P&L of the client’s holding and operating companies in-house at no cost to the client. The lender was satisfied with what Lakepoint was able to produce, and the deal was approved shortly thereafter.
As an added bonus, the bridge financing was actually less expensive than the construction financing on the hotel being renovated. So, even if the client had been able to secure additional financing from the construction lender, Lakepoint’s solution would have saved the client money.
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