Hotel has been in the market for 2 years. Asking price is $8,000,000. Hotel will be renovated, branded- total cost of renovation and to be branded is $11,535.000.
They have a lender (Star Bank) willing to provide 50% of the total project cost. They also have another bank (Prize) willing to provide a mezzanine loan for the remaining 15%.
Star Bank Terms:
Interest Rate: 7%
Loan Term: 10
Points: 4 upfront
Collateral: Hotel owner by Dean Hotel investements
PrizeBank Terms:
Interest Rate: 12%
Loan Term: 5
Points: 2 upfront
Collateral: subordinated claim of the blackstone hotel
Calculate the amount of the loan from star bank, payment amount and effective interest rate.