Folio VII · 7 of 7
Financing hotel acquisitions
CMBS, balance-sheet, agency-adjacent, and seller paper — what a hotel buyer should understand before a term sheet feels like a compliment.
Hotel debt underwrites operations and a story about next year. It is not apartment debt with a different SIC code. If your lender cannot explain what happens in a PIP year, you do not have a partner. You have a close date.
If your lender cannot explain what happens in a PIP year, you do not have a partner. You have a close date.
Methods · named, not blended
I · Claim
Cash flow they will not operate
Flag term, operator, ground lease show up in term sheets because the lender does not want the keys.
II · Room
Balance sheet, CMBS, seller paper
Public desks are graph nodes. Harbor will not invent a loan amount or quote a typical LTV as a covenant.
III · Shock
Occupancy misses by 10%
Same honesty test as the estimate. If the loan dies in that cell, write it down before you toast.
IV · CIM
Do not finance a story
A short clock does not make the T12 true. Rebuild rooms revenue before you borrow against it.
01What lenders actually buy
They buy a claim on cash flow and a building they do not want to operate. That is why flags, franchise remaining term, operator quality, and a ground lease show up in term sheets. A beautiful independent with a thin T12 and a 22-year ground lease is a hard loan, not a moral failure.
02The usual rooms
Balance-sheet banks and hospitality specialty lenders for relationship and story files. CMBS when the asset is standardized enough to live in a trust — and when you can live with servicing that is not a conversation. Life companies for the quieter full-service trophies. Seller paper when the gap is honesty, not just rate.
Harbor lists Berkadia, Walker & Dunlop, and money-center desks as graph nodes because they are public practices. We do not invent loan amounts or quote a “typical LTV” as if it were a covenant.
03The questions that belong on page one
Recourse or not. Interest-only period. PIP holdback. Franchise requirements. Ground-lease consent. Insurance (especially coastal and wildfire). Prepayment. And what happens if occupancy misses by 10% — the same shock Harbor runs on ADR in the estimate. If the loan dies in that cell, write it down before you toast.
04Do not finance a CIM
A lender will sometimes accept a seller’s numbers because the clock is short. That is their credit file. It does not make the T12 true. Rebuild it. The underwrite-acquisition job and the estimate desk exist so you do not borrow against a story.
Questions owners ask
- Is Harbor a lender?
- No. We publish how the job works and who the public desks are. We do not quote loans or take placement fees.
- Should I use CMBS on a 70-key independent?
- Often no. Standardized select-service is the more natural CMBS guest. A story house usually wants a balance-sheet conversation.
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