Axilla Capital structures $13 million financing for Hyatt Lisle

Axilla Capital, LLC, has arranged a $13 million first mortgage and mezzanine loan to finance the acquisition of the Hyatt Lisle in Lisle, Ill. The loans represent 80-percent of the hotel’s total acquisition costs and the interest rate was fixed for 10 years. Joel Mazur, managing principal of Axilla Capital, originated the transaction and secured the financing.
 
The Hyatt Lisle is a full-service hotel that opened in 1988. The 13-story property recently underwent an $8 million renovation, including upgrades to the guestrooms, building exterior, corridors and public space.
 
“This was a complex transaction because the hotel is still in a state of transition,” Mazur explained. “While the asset generates significant revenue, the prior owner was operating the hotel on a thin margin.” According to PKF Consulting’s 2014 report, Trends in the Hotel Industry, the average labor costs at full-service hotels amounts to 45 percent of a hotel’s total operating expenses and 33 percent of its revenue. Mazur claims that “the Hyatt was operating well in excess of these market standards.”
 
Axilla was able to demonstrate to capital sources that its client had the experience to reduce certain operating expenses almost immediately. This, coupled with the fact that the hotel had yet to capture its anticipated market share following the renovations, suggested to lenders that there is significant upside potential still to be realized.

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