Cronheim Hotel Capital arranges local bank financing for master-leaked Motel 6 and PJ's Pancake House

Lawrenceville, NJ Cronheim Hotel Capital (CHC) arranged financing for the Motel 6 Lawrence Township, a 104-key, economy-class motel. Brandon Szwalbenest and Andrew Stewart secured the financing from a local bank lender with demonstrated market knowledge and an appetite for hospitality lending.

Constructed in 1978, the Motel 6 Lawrence Township has been a mainstay on the Brunswick Pike for decades. As the most affordable, flagged, lodging option in the market, the property is seen as more resilient to economic headwinds than most. With the asset successfully surpassing pre-pandemic levels of operational efficiency, the lender felt comfortable that the property would continue to thrive within an attractive market.

This particular loan was secured not by the cashflow of the motel itself, but rather, by master-lease payments paid by the hotel operator to the property owner. This structure, a creation of financial engineering, fixed the landlord’s share of the cash flow generated by the property, allowing for additional resistance to the cyclicality of the hospitality market. The Cronheim Team worked tirelessly to ensure that potential lenders had a thorough understanding of the benefits of this relatively uncommon structure.

In addition to the Motel 6, the subject collateral also included the sixth location of PJ’s Pancake House, a local restaurant chain that recently signed a long-term lease at the property. The additional cashflow provided by PJ’s served to diversify the lender’s exposure to any one asset class.

Hospitality and non-credit restaurant financing are particularly challenging in today’s ever-evolving marketplace. The Cronheim team was pleased to provide the optimal financing solution for these difficult-to-finance property types. As demonstrated in this case, if a financing solution exists in the marketplace, the Cronheim team will be able to find it.