How We Structure a Deal
Summary Description of Hotel Financial Strategies™
Hotel Financial Strategies (HFS) provides an innovative mezzanine financing program for multi-family, hospitality, medical and high-rise development as well as condo conversions trademarked as “Hotel Financial Strategies™”.
Hotel Financial Strategies was recognized as the “2005 Financing Idea of the Year” by IRETO – The International Real Estate Trade Organization. Our investment “sweet spot” is in the $1milion to $30 million range.
How does Hotel Financial Strategies work?
We then provide the developer with a set of vendors to be approved and hired by the developer directly. HFS’s continued relationship with its preferred vendors helps ensure timely and smooth performance by the vendors.
HFS accepts the risk of completion and sale of the units — thereby starting the developer off with presales.
The developer’s obligations to us are secured by a pledge of its equity in the property-owning entity, which like its pledging parent is a bankruptcy remote SPE. We also require a normal “warm body” recourse guaranty from the developer for customary “bad boy” acts such as voluntary bankruptcy, appropriation of insurance proceeds, etc.
Thus in summary, Hotel Financial Strategies offers the best of several worlds – the LTV coverage and subordination to the senior mortgage lender of conventional mezzanine financing; the developer-oriented provision of preferred vendors with a relationship with HFS. This will give comfort to the senior mortgage lender that HFS is there to pay a pre-agreed portion up to 35% of your media, furniture, fixture and construction materials. And in addition offer the developer a program that generates revenue to pay there portion of the marketing budget which will generate additional profit for the projects bottom line.
Close Outs and Inventory Loans or Purchases
“The Last 25” Tough–to–sell Units – On some projects the last units seem to be the slowest to move, especially when the developer is already engulfed in a “yet to be named” new project and all of its associated decisions. We facilitate developers who want to close out a project by purchasing the remaining inventory in their project.
Hospitality and Resorts
We assist in filling Rooms, stabilize & balance income after providing debt or equity funding tied to our vendors meeting, or leveraging your bids on FF&E construction supplies as well as Media.