Hotel Bridge Loan | $5M Bridge Refinance for Stalled PIP and Franchise Compliance

The hotel's PIP had stalled partway through execution. The renovation had been initiated under the prior financing structure, but the remaining scope was unfunded and the project had stopped. Guest rooms that had been partially renovated were not generating the revenue a completed PIP would produce. The franchise brand's compliance requirements were at risk. Without a capital solution that could retire the existing debt, inject fresh renovation capital, and provide a defined timeline for PIP completion, the borrower faced the prospect of losing the franchise agreement on a midscale branded hotel in a market where the brand affiliation was the primary revenue driver.

The financing had to solve multiple problems simultaneously: the existing debt had to be refinanced to clear the prior capital structure, the remaining PIP scope had to be funded with fresh CapEx, the franchise brand had to be satisfied that the renovation would be completed to its standards on a defined timeline, and the exit strategy had to demonstrate a credible path to permanent financing once the PIP was complete and revenue had stabilized. The bridge lender needed confidence that the asset's post-renovation performance would support both the bridge facility's debt service during the hold period and the permanent financing takeout at exit.

• PIP stalled partway through execution with remaining renovation scope unfunded
• Franchise compliance at risk without a defined PIP completion timeline and capital commitment
• Existing debt needed to be refinanced before fresh CapEx could be deployed
• Bridge lender required a credible exit strategy from renovation through stabilization to permanent takeout
• 71-key midscale franchise hotel operating below post-renovation potential with partially completed PIP

Cornovus Capital structured the hotel bridge loan to retire the existing debt and deploy fresh CapEx for PIP completion in a single facility. The bridge structure provided the short-term capital the asset needed to move from its current partially renovated condition through PIP completion to stabilized performance, with a defined exit to permanent financing or disposition. The CapEx allocation was earmarked for the remaining renovation scope, with draws tied to construction milestones and franchise compliance checkpoints. A 4% FF&E reserve funded from gross revenue ensured ongoing property investment beyond the PIP. The 1.25x DSCR covenant maintained cash flow discipline throughout the bridge period.

Cornovus Capital coordinated the bridge refinance, the CapEx deployment plan, the franchise brand's PIP timeline requirements, and the exit strategy documentation. The credit package presented the hotel's post-renovation revenue projections, the competitive set performance in the market, and the path from current occupancy through PIP completion to stabilized ADR and RevPar. The bridge facility was structured with an extension option to provide additional runway if the renovation or stabilization timeline required it, subject to performance thresholds and DSCR compliance.

• Bridge facility structured to retire existing debt and deploy fresh CapEx for PIP completion
• CapEx draws tied to construction milestones and franchise compliance checkpoints
• 4% FF&E reserve funded from gross revenue for ongoing property investment
• 1.25x minimum DSCR covenant maintaining cash flow discipline through the bridge period
• Extension option available subject to performance thresholds
• Defined exit strategy: PIP completion, revenue stabilization, permanent financing takeout or disposition

The hotel bridge loan closed with the existing debt retired, fresh CapEx capital deployed for PIP completion, and the franchise brand's compliance requirements addressed with a defined renovation timeline. The 71-key midscale franchise hotel moved from a stalled renovation with an uncertain capital structure to a fully funded bridge facility with a clear path from PIP completion through revenue stabilization to permanent financing.

The transaction demonstrated how bridge financing can solve a hospitality capital structure that has broken down mid-renovation. The PIP had stalled, the prior financing could not fund the remaining scope, and the franchise agreement was at risk. Cornovus Capital structured a bridge facility that replaced the prior debt, funded the renovation, preserved the franchise, and created the exit path the borrower needed to complete the repositioning and transition to permanent capital. The 4% FF&E reserve and 1.25x DSCR covenant ensured the property maintained physical investment and cash flow standards throughout the bridge period, positioning the asset for the permanent takeout the exit strategy required.

• Bridge facility closed, retiring existing debt and deploying fresh CapEx for PIP completion
• 71-key midscale franchise hotel moved from stalled renovation to a fully funded PIP with a defined timeline
• Franchise compliance preserved with capital commitment and renovation schedule satisfying brand requirements
• 4% FF&E reserve and 1.25x DSCR covenant in place through the bridge period
• Exit strategy defined: PIP completion, revenue stabilization, permanent financing or disposition
• Extension option available to provide additional runway if needed

Additional financing outcomes are available in our Transaction Highlights archive.