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Remington Financial Group Inc., structured and secured high leverage acquisition financing for the purchase of a name brand hotel company. The newly renovated 150-room hotel, which was purchased by a New Jersey based hotel investment and management firm, is centrally located at the crossroads of Connecticut.
The property was originally purchased by a NY-based private-equity group in late 2003 and was extensively renovated in 2004. Despite these upgrades, the property continued to under-perform expectations, showing a negative cash flow of $500,000 annually. In contrast, RFG Hospitality Capital and the investment and firm saw significant up-side.
RFG mitigated the negative cash-flow and secondary-market location issues by illustrating the investment firm's proven track of turning around mismanaged properties. This enabled RFG's lender to become comfortable with the deal and as such provided an aggressive three year floating-rate non-recourse bridge loan priced at 375 bps over LIBOR representing 94 percent of the purchase price and 75 percent of the total acquisition budget.
A representative of the investment firm was quoted as saying, "RFG worked quickly and efficiently to produce results. The process involved multiple steps and multiple points of potential failure, and RFG provided insightful comments and constructive prodding to keep the process from slowing down."
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