Commercial Note Equity Request

Creighton & Associates has received an equity request for the acquisition of three commercial notes on a hotel portfolio.  The purchaser, an existing REIT, is preferably looking for an equity partner in the transaction, but is open to various structures for the loan request.

San Diego Marriott-Image Flickr.com

The current notes on the three hotel properties are for approximately $30 million.  The REIT is putting $15 million capital toward the transaction, and is looking for a debt or equity player for the remaining $15 million.  The broad overview has been submitted to the fund for review.

The fund does offer financing for commercial notes, though there are a few factors that have to be properly addressed for the funds serious interest in the scenario.  The first issue is property type.  In this case, the collateral is three flagged hotels.  In the current economy this isn’t as attractive as other commercial property.  The second issue is related to the projected rate of return for the funds $15 million investment.  There are many buying opportunities in the current market, so the return will need to be sufficient to justify the fund placing dollars here verses pursuing other more lucrative investments.

Note: The picture shown above is for visual purposes only.  It is not a subject property in this loan request.