Credit Evaluation School Instructor eBook - Oct 2023

People: Purpose:

Borrower(s) – Shoal, LLC, Guarantor(s) – Mohammad XX

Loan A: Refinance of current real estate loan. Loan B: New convertible draw note. The loan is to provide cash that will be used as equity for the new hotel that is to be constructed. The loan will have an 18 ‐ month draw period that will then convert to a perm loan for a term and amortization of 20 years. With the proposed cash ‐ out debt refinance average DSCR of 1.36X. Occupancy rates have been below its peers, but able to maintain a higher average daily rate (ADR) compared to its peers. Guarantor is the sole owner and operator of the hotel, net worth is currently $5MM, liquidity has dropped to $110M mainly because of the $1MM investment of his own cash to improve the hotel. Loan A & B: Title insured first mortgage lien and priority assignment of rents and leases on commercial real estate. The subject property has an LTV of 67%.

Payment:

Protection:

Problem: Prospects:

None noted, loans continue to pay as agreed. DSCR and LTV are acceptable

Continue to monitor payments and financial condition through collection of annual tax returns.