HOTEL/MOTEL UNDERWRITING GUIDELINES 

Underwriting Profile

Hotel financing is a specialty nice better left to the very knowledgeable. The investors in this market, like GE Capital, are very large and financially choosy companies. GE finances only limited service hotels as you will note below.

Full Service Hotels

Includes full service-luxury, full service-resort, full service-midscale (e.g., Hilton, Marriott, Holiday Inn, etc). Caters primarily to business, government and vacation travelers.

*Max. LTV - 65 to 70%
*Max. Amoritzation - 20 to 25 years
*Min. DSCR - 1.40x
*Min. Occupancy - 60% over the past three years
*Max. Occupancy when calculating room revenue - 75%
*Min. Furniture, fixturs and equipment (FF&E)
-the greater of actual of 5% of total revenue
*Min. Franchise fee - the greater of actual or 5% of total revenue
*Min. Maintenance fee - the greater or actual of 4.5% of total revenue
*Capitalization rate - use market-driven capitalization rate,
typically 10% to 13%
*Food and beverage (F&B) contribution should be less than 40%

Limited Service Hotels

Includes limited service, midscale, limited service-economy, limited service-
extended stay (e.g., Courtyard and Hampton Inn, Budget Inn, etc.). Caters primarily to business and vacation travelers, typically offers limited food services

*Max. LTV - 65% to 70%
*Max. Amortization - 20 to 25 years
*Min. DSCR - 1.45x
*Min occupancy - 60% over the past three years
*Max. Occupancy when calculating room revenue - 75%
*Min. Furniture, fixtures and equipment (FF&E) - the greater
of actual or 5% of total revenue
*Min. Franchise fee - the greater of actual or 5% of total revenue.
*Min. Maintenance fee - the greater of actual or 4.5% of total revenue
*Capitalization rate - user market-driven capitalization rate, typically 10% to 13%

Suite/Extended Stay

Includes limited service, extended stay (e.g. Marriott Suites, Embassy Suites and Residence
Inn, etc.). Rooms accommodate a longer stay than typical full or limited service hotels; rooms often have separate living, sleeping and kitchen areas.

*Max. LTV - 65%
*Max. Amortization - 20 to 25 years
*Min. DSCR - 1.45x
*Min. Occupancy - 60% over the past three years
*Max. Occupancy when calculating room revenue- 75%
*Min. Furniture, fixtures and equipment (FF&E) - the greater of actual or 5% of total revenue
*Min. Franchise fee - the greater of actual or 5% of total revenue