Harborview Convention Hotel
Mezzanine behind senior debt to fund a brand-mandated PIP on a full-service hotel
The Challenge
What the sponsor faced.
Sponsor owned a 320-key full-service convention hotel carrying a brand-mandated PIP budgeted at $30M. The senior lender agreed to future-fund $14M of the PIP but held total senior proceeds at 65% of a $148M cost basis, leaving a $16M renovation gap plus reserves. A larger equity check would have pushed sponsor contribution past 20% of cost, and deferring the PIP risked the flag.
The Structure
How we structured it.
A $22.2M mezzanine loan behind a $96.2M senior facility against the $148M total capitalization lifted combined last-dollar leverage to 80% of cost, with the mezz attaching at 65% and detaching at 80%. The loan was secured by a pledge of the equity interests in the borrower, priced fixed at 12.50%, interest-only with a funded interest reserve, and scheduled to repay at exit. An intercreditor agreement with the senior lender governed cure rights, a purchase option, and a standstill.
The Outcome
What the sponsor got.
The mezzanine funded at the senior closing and released the $16M PIP balance plus a $6.2M interest and FF&E reserve. The renovation completed on the brand's deadline and preserved the flag. Sponsor equity held at $29.6M, 20% of total cost.
Deal Mechanics
Structural highlights.
Mezzanine secured by a pledge of the borrower's equity interests
80% combined last-dollar LTC, mezzanine banded 65% to 80%
Intercreditor set cure rights, purchase option, and standstill
More in Sector
Related hotel transactions.
Refinancing of middle market luxury ski resort property
Bridge financing for middle market historic hotel renovation
Newsletter
Market intelligence, straight to your inbox.
Quarterly debt market commentary, capital stack benchmarks, and select transaction highlights. No marketing, no filler.
Have a Similar Situation?
Let's structure your transaction.
Every deal is different. Every structure is built around the business plan. Tell us what you're working on.