CHATHAM, NJ—Cronheim Hotel Capital has secured a $7.5-million loan for the acquisition of a Sleep Inn and Mainstay Suites located west of Lancaster, PA. The two hotels, located adjacent to one another, were acquired for $10 million from a local owner/operator. CHC financed the purchase at 75% of the acquisition price with 10-year, fixed-rate financing on a 27-year amortization schedule locked at 4.39%.
The two hotels, totaling 151 keys, offer both transient and extended-stay product. The properties are located off Route 30 in Mountville, PA, approximately five miles west of Lancaster between Lancaster and York, PA. Local demand generators include Lancaster tourism and Spooky Nook, one of the largest indoor sports facilities in the county, in addition to local transient and corporate demand.
“We’re pleased to have secured leveraged financing for two budget brand hotels located in a secondary market,” said David Turley, principal. “Central Pennsylvania is a very stable market, and these hotels were clearly under-managed, but this was by no means an easy assignment given the flags, leverage requirement and location. Our efforts helped the borrower lock in a 6.33% loan constant on a 9% cap acquisition at 75% of the purchase price. The resulting cash-on-cash is over 15%.”