When considering refinancing your existing hotel assets, it’s important to understand the current lending climate.
Here’s what our research found:
- Ten-year Treasury Swap rate has increased by 82% over the same time last year
- Ten-year Treasury Constant maturity rate has increased by 72% in the last year
- PRIME Rate: The Fed has indicated that no rate hikes are planned until 2015
- LIBOR: Stands at record lows
What this means to you:
1. Since most hospitality fixed rate loan are tied to the Treasuries, all indication are that they will continue to rise and refinancing now should result in rates lower than if you were to wait.
2. Most SBA loans are tied to the Prime Rate so you can expect to see some increase next year. If you have had enjoyed rising NOI’s in the past few years now may be a good time to refinance to a non-recourse or conventional loan to fix your rate before Prime begins it’ inevitable rise in the years to come.
3. LIBOR has nowhere to go but up as it sits now at almost historic lows.
4. Perhaps it’s time to consider recapitalizing for improvements and improving your cash flow by refinancing to extend your amortization period and/or reducing or fixing your interest rate.
A qualified hotel lending specialist can help you explore your options and should be willing to do so with no up front charges. You want to seek someone who works primarily with hotel properties and is willing to be paid when the loan closing. Fees and terms of the loan should be clearly communicated and the loan broker should be willing and able to provide you with references for closed loans and satisfied clients!