Why Post-Renovation Ramp Loans Are a Smart Move

Draganiuk: “Lenders need comfort with a hotel and confidence that the recent renovations are something guests will be attracted to, and which will yield improved property cash flow.”

SAN DIEGO—Hoteliers who procure a ramp loan after renovating and prior to securing permanent financing are essentially cutting the effective interest rates by hundreds of basis points, Alex Draganiuk, director in the debt and equity finance group at Mission Capital Advisors, tells GlobeSt.com. The firm’s team of Draganiuk, Gregg Applefield and Lexington Henn recently represented property owner SD Carmel Hotel Partners LLC in securing a three-year loan from a private-equity fund as a $20.75-million ramp loan for the Hotel Karlan, a 174-key, soft-branded DoubleTree by Hilton located in northern San Diego. The first-mortgage financing will replace the property’s renovation loan and a preferred-equity loan.

After acquiring the property in 2014, the sponsor implemented comprehensive renovations to the property, enhancing guestrooms, common areas, food-and-beverage outlets and meeting and spa facilities.