Hotel Renovation Loan | Deep-Turn Repositioning and Upper-Economy Brand Conversion

The property had been neglected for more than a decade under prior ownership. Performance was far below market expectations despite a location directly off a major interstate exit in a regional economy that had added more than 5,000 jobs since the recession. A world-class glass manufacturing facility employing nearly 2,500 workers and representing a $450 million investment operated 1.2 miles from the hotel. Distribution, manufacturing, and industrial companies were concentrated within a 2-mile radius. A major university, an entertainment arena, a minor league ballpark, and four hospitals and medical centers were all within a short drive. None of this demand had been engaged by the prior ownership. The property was generating a fraction of the revenue the location supported.

The renovation scope that became apparent after acquisition was far more extensive than the initial budget anticipated. What began as a full room renovation, lobby rebuild, and exterior refresh expanded into a structural rehabilitation when the roof, HVAC, electrical systems, and second-story deck structures were found to require complete replacement. The entire roof had to be torn off, capped, and rebuilt. The HVAC system was replaced in full. Large portions of the hotel were rewired, and a new 4-pole electrical panel was installed. The complete second-story deck on both the front and back of the building was demolished and rebuilt. These were not cosmetic improvements. They were building-system replacements that had to be funded, managed, and executed while the full guest room and common area renovation continued simultaneously.

The expanded scope required additional capital beyond the committed SBA facility. Cornovus Capital had to secure the funding to complete the structural work without disrupting the project's timeline or the franchise brand's PIP compliance requirements.

• Property neglected for 10+ years with no commercial outreach despite 2,500-employee glass manufacturer, 5,000+ post-recession jobs, and four hospitals within a short drive
• Renovation scope expanded significantly: complete roof replacement, full HVAC replacement, electrical rewiring with 4-pole panel upgrade, full second-story deck demolition and rebuild
• Additional $504,000 in capital required beyond the committed SBA facility to fund the expanded structural scope
• All building-system replacements had to be managed alongside the full guest room and common area renovation without disrupting the project timeline
• No flagged upper-economy hotel within 5 miles despite significant commercial, manufacturing, medical, and educational demand generators

Cornovus Capital structured the $1,980,000 hotel renovation loan with a 12-month interest-only period aligned to the renovation timeline, converting to principal and interest once the property was operational under the new upper-economy brand. The SBA 7(a) facility covered the acquisition at $823,000 including seller carry, the initial renovation budget, working capital, and closing costs. When the expanded renovation scope required additional capital, Cornovus Capital secured $504,000 in additional funding to complete the roof, HVAC, electrical, and deck replacements and remaining scope items. The total project cost reached approximately $2.83 million.

Cornovus Capital's role on this transaction went beyond capital markets advisory. The firm served as owner's representative, managing procurement, construction oversight, cost segregation analysis, and operational advisory throughout the renovation. Cornovus Capital was the managing partner of multiple LLCs involved in the project structure, providing continuity of leadership from financing through construction through stabilization. The renovation was executed with the hotel shut down entirely, with every room stripped and rebuilt, the lobby reconstructed, the building exterior renovated, and a 2,500-square-foot lobby with coffee bar added. The upper-economy brand conversion was completed to the franchise's standards, with the property positioned to convert to the brand's premium tier once occupancy requirements were achieved.

The proforma documented the market opportunity the prior ownership had failed to capture. The property sat on a major interstate corridor with no competing flagged upper-economy hotel within 5 miles. The nearest upper-economy competitors were 6.6 miles south and 10 miles north. A glass manufacturing facility with 2,500 employees and a $450 million investment operated 1.2 miles away. Distribution, manufacturing, and industrial sectors within a 2-mile radius represented an untapped commercial demand base. Four hospitals and medical centers, a major university, an entertainment arena, and a minor league sports venue were all within short driving distance. Projected Year 1 revenue exceeded $1 million on the strength of the location and the absence of upper-upper-economy competition.

• $1,980,000 SBA 7(a) facility with 12-month interest-only period for acquisition and initial renovation
• $504,000 in additional capital secured when renovation scope expanded beyond original budget for roof, HVAC, electrical, and deck
• Cornovus Capital served as owner's representative, procurement coordinator, project manager, cost segregation advisor, and managing partner of project LLCs
• Deep-turn renovation: all 74 rooms, lobby, exterior, continental breakfast, 2,500-square-foot lobby with coffee bar, plus roof, HVAC, electrical, and deck replacement
• Proforma documented untapped demand from manufacturing, distribution, medical, university, and interstate travel sectors with no upper-economy competition within 5 miles

The hotel renovation loan closed and the deep-turn renovation was executed with Cornovus Capital serving as owner's representative throughout the project. The 74-key upper-economy hotel was completely rebuilt from the structure up: new roof, new HVAC systems, rewired electrical with a 4-pole panel upgrade, new second-story decks on both the front and back of the building, all 74 guest rooms renovated to franchise standards, a new lobby, renovated exterior, and the addition of a 2,500-square-foot lobby with coffee bar. The total capital deployed reached approximately $2.83 million, transforming a property purchased at $823,000 into an asset with an as-stabilized value of $3,634,000.

The transaction demonstrated the full scope of Cornovus Capital's capabilities beyond capital markets advisory. Origination, underwriting, and placement of the SBA facility were the starting point. Owner's representation, procurement, project management, cost segregation, construction oversight, and managing partner responsibilities across the project's LLC structure carried the engagement from closing through renovation through stabilization. The property opened as a nationally branded upper-economy hotel in a market with no competing flagged upper-economy product within 5 miles, positioned to capture the commercial, manufacturing, medical, university, and interstate travel demand that the prior ownership had never engaged. The 4.4x value creation from purchase price to stabilized value reflected both the capital structure Cornovus Capital built and the renovation execution Cornovus Capital managed.

• $1,980,000 SBA 7(a) facility plus additional capital for expanded scope deployed across a $2.83M total project
• 74-key upper-economy hotel fully renovated: all rooms, lobby, exterior, roof, HVAC, electrical, deck structures, breakfast area, and 2,500-square-foot lobby with coffee bar
• Property value increased from $823,000 purchase price to $3,634,000 as-stabilized value (4.4x multiple)
• As-completed value of $2,738,000 ($37,000 per key) and as-stabilized value of $49,100 per key
• Nationally branded upper-economy hotel opened in a market with no flagged upper-economy competition within 5 miles
• Projected Year 1 revenue exceeding $1 million supported by manufacturing, distribution, medical, university, and interstate demand
• Cornovus Capital served as owner's representative, project manager, and managing partner from financing through renovation through stabilization

Additional financing outcomes are available in our Transaction Highlights archive.