From its roots as a hotel-specific lender for furniture, fixtures and equipment in 2011, Access Point Financial has grown to a direct full-service lender, specializing in hotel bridge loans/refinancing, construction, mezzanine debt, preferred equity and capital-expenditure lending. Through various programs, APF provides full-stack debt capital solutions to qualified multiunit and private equity owners of major hotel brands and independent boutique hotels throughout the U.S. Now the company is adding a new expertise: property improvement plan lending. The revised offering is designed to support hotel owners in meeting franchisor-mandated improvements and refreshing their assets.
During the pandemic, APF CEO Michael Lipson and Matthew Hick, managing director, business development, knew that many hotels were unable to complete their PIPs as they needed to do. "Any money that's in escrow to do improvements and such was then going to make mortgage payments," Lipson said.
Over the past two years, franchise systems began looking to their owners to start improving properties through PIPs—and started to enforce the requirements.
Access Point Financial's new program is a debt program, but it's almost quasi-equity in the sense that "we have pretty open prepayment penalty," Lipson said. The program allows the sponsor to do the work, improve the property, demonstrate that the guest satisfaction scores go up, reposition the hotel in a better position and then pay APF "pretty quickly," Lipson explained. "That's the attractiveness of our financing."
"When we first started the company, this was the primary product we had," Hick said. "We stopped during COVID because no one was renovating hotels." But Hick believes this current rendition of the program is a better version that what the company had before. "It has a couple of years interest-only, allows hotels more time to renovate and funds like a construction loan, where they access the money as needed. And they are only paying interest on the loan dollars that they're utilizing."
Lipson said APF's PIP renovation program is a comprehensive solution to provide financial support and flexibility to hotel owners for property improvements. "With our understanding of the industry, we can offer a swift approval process to empower hoteliers to fund the renovation of their properties seamlessly."
"The PIP loans we are offering bring a new level of financial assistance to hotel owners," Hick said. "We look forward to working with owners to provide an innovative lending solution that works alongside their existing mortgage to allow them to renovate their assets, keep up-to-date with brand standards and compete at a high level among their competitors. This program provides two years of interest-only payments to allow hotel owners time to renovate and ramp up property operations. Additionally, owners avoid needing a capital call to their investors, and it is less expensive than mezzanine debt."
Preparing for the Future
In the past six months, APF has revamped its capabilities with CapEx and PIP financing and preferred equity, in addition to its capabilities financing for bridge loans, mezzanine loans and construction financing capabilities, culminating in closing multiple $40+ million transactions.
“We think the next 18-month horizon will really be a time when APF can be of service to our hotel clients [and] borrowers and work with new sponsors who may never have thought of APF as a company that could solve their capital needs,” Lipson said of the company’s new offerings.
Some key components of the PIP renovation program include:
- Loan size from $1 million to $5 million, with larger loans considered on individual basis.
- Typical loan structure featuring 24-month interest-only period followed by five-year fully self-amortizing period, allowing flexibility for the hotel owner.
- One percent origination fee.
- Available to all qualified multi-unit hotel owners of branded properties throughout the United States.
Clicking with Clients
APF provides full capital-stack debt solutions to hoteliers. The company is 100 percent hotel-focused and is “one of the most capable lenders who can understand a hotel sponsors' capabilities and assets story that may not be fully reflected in the numbers,” Lipson said. APF has capital to deploy and the company’s goal is to be a "reliable, creative and aggressive" lending partner for its current borrowers and grow the business with new clients. “We have the capital to do it, and we think that the industry is in a spot where what we can provide is a fit.”
Lipson’s charter as the CEO, a role he took on in 2021, has been to grow the organization's capabilities further and deepen its ties to the industry. The goal is to make the hospitality industry aware of its current offerings, “much more than the capital solutions” Lipson said. “This is exciting for me as I was one of the first to do hotel [commercial mortgage-backed securities], and now, growing the APF platform in this environment is rewarding hard work.”
Lipson said that collaboration is “key” across the company. “It has been one of the most significant culture initiatives I have been investing in with the APF team since I took the helm.” The company, he said, has grown its team and capabilities so that they can work with any level of client, “from a $10 million select-service acquisition to a $50 million refinancing of a construction loan with no operating history,” Lipson said. “This is done through the collaboration of our entire team, which collectively has over a century of hospitality-specific experience.”