DTZ’s Real Estate Investment Banking Group arranged a repositioning loan for the 206-key Kauai Sands Hotel in Kapaa, Hawaii.
The loan will facilitate an overhaul of the property to upgrade the hotel from 2 stars to 3.5 stars.
Senior vice president Jeffrey Donnelly, who leads the RE Investment Banking Group out of New York, and who led the capital raise, said “This is an exceptionally well-sited property on a white sand, swim-out beach that needs and deserves extensive renovations.
“There were a couple of aspects of the deal that made this financing a little harder to place. One of the challenges was that since our clients had acquired the hotel through a foreclosure auction, the financing was at a high-ish loan-to-cost ratio, but at a very low loan-to-value ratio, which narrowed our universe of prospective lenders somewhat.
“We were successful in finding a lender that understood that the sponsor had simply bought the property right, and that also shared the borrowers’ belief in its upgrade potential.”
The DTZ team arranged the two-year bridge financing in order to give the sponsors ample time to complete the property repositioning. The property will then be refinanced with new, longer term permanent financing.