"The biggest problem we have in our industry right now is theavailability of money," points out Sumner Baye, president ofInternational Hotel Network. "We're not out of the credit squeezeyet. The lenders are not lending in the way whole hospitalityindustry would like."

The capital source, Davis remarks, has a fair amount ofhospitality investments and is very familiar with the hotelindustry. "They understand that there will be opportunities in thenext two years to do acquisitions, renovations, repositioning playsand that's what the capital seeks to do, to refinance, takeadvantage of maturities, discount pay-offs, and good sponsors beingable to reposition assets."

The loans are structured to be up to 85% of the project/assetvalue and will range in rates up to 10%, on either a fixed orfloating rate basis. "In exchange for going to 85% LTV," Davisnotes. "The pay rate is pretty reasonable, depending on the deal,average 8-10% interest only three- to five-year term, but its verymuch a participating mortgage, which means they'll end up taking15% to 25% of the cash flow and the residual, because they'resolving to higher yields. The lender will end up selling off the Anotes of these loans and keeping the B and the mezz."