PKF Capital Launches Hotel Financing Program
PKF Capital -- Hotels, 7/29/2008 9:18:00 AM
Moving to address critical financial needs in funding today’s hotel transactions, PKF Capital announced the launch of a Hotel Finance Program designed to help hospitality investors and owners secure funds required to purchase, refinance or renovate properties.
“Securing adequate capital is the primary issue today that determines whether a hotel deal succeeds or fails,” says PKF Capital Executive Managing Director Bob Eaton. “With our new program, we are moving aggressively to help our clients transact business. We are rounding out the suite of services that the PKF family of companies offers, from consulting, hospitality research, through brokerage.”
Chosen to head up this program is Steve Hanover, a former principal of Sequoia Capital Partners of San Luis Obispo, CA, with extensive commercial real estate lending and hospitality finance experience. Hanover will be Senior Managing Director of PKF Capital Hotel Finance and will work with existing and new clients on debt and equity placement.
“In order to close today’s sales transactions, timely and efficient sourcing of hotel debt is essential,” says Hanover. “Our Hotel Finance Program provides PKF’s clients with financing opportunities for long-term, short-term or bridge financing as well as hotel construction loans.”
The Hotel Finance Program, says Hanover, “gives PKF the ability to prescreen finance deals with preliminary or ‘soft’ quotes on acquisition financing so that both buyer and sellers can confidently go forward with the sales closing process.”
Bridge financing can also be made available through PKF Capital’s sources when owners are repositioning a property by reflagging it or by making property improvements and a period of improving cash flow is required in order stabilize the property’s permanent income.
Hotel refinancing is also a critical need today where properties’ current loans are maturing and borrowers need to find funds to refinance existing loans with permanent debt.
Critical Demand for Financing During Debt Crunch
After a period of easy credit that ended last year, hotel investors are now faced with an unusually tight credit situation. “Constant sourcing of lenders is essential today coupled with innovation and creativity in order to successfully address this challenging situation,” says Hanover. “It is also very important to thoroughly understand the hotel business. This is one of PKF’s historic strengths, since our firm has led the hotel consulting industry for almost a century. We feel we have a lot of value to add beyond what can be offered by typical debt consultants.”
Because of the unique nature of hotel properties, hotels are more than just commercial real estate investments, he says. They are complex business operations that offer distinct advantages but also require detailed understanding. “They are true operating businesses housed in specialized real estate,” says Hanover.
Hanover has an extensive network of financing sources, one required in this highly volatile funding market where lenders are under their own type of stress and may pull out of the market on short notice. This is why Hanover provides clients with multiple loan options from a variety of lenders when engaged to finance hotels. “There is nothing worse than having a lender temporarily suspend its lending operations in the middle of a deal. Borrowers need alternatives and that’s what we can provide them to ensure a successful loan closing.”
PKF Capital’s Hotel Finance Program is scaled to serve client deals that are both large and small, from renovations of boutique properties to acquisitions of very large properties or resorts and to refinance their existing permanent debt.
Silver Lining Beneath the Dark Clouds
In spite of the very tough financial climate, Hanover says there are still solid investment opportunities in cities with fundamental hospitality strengths, popular cities like San Francisco, Washington D.C., New York and Los Angeles.
“Matching investors who have longed to get into solid markets with the right financing is very possible,” says Hanover. “I like to think that every prospective deal is possible.”
Says Eaton, “We hired Steve to head up our Hotel Finance Program because he gets up every morning thinking he can finance deals.” Steve will be working with the team of hotel brokers under PKF Capital as well as PKF consulting professionals located in 12 offices across the U.S.
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