Staff Menu (IO ID#: 2983):
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Completed Debt
Hospitality
Willowbrook Inn - 220 Rooms
Willowbrook, IL
INVESTMENT STRATEGY
INVESTMENT TYPE
Debt
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100% funded
Offered By Hetal Hospitality, LLC
%* TARGET IRR 8.0%-%
* TARGET EQUITY MULTIPLE
Estimated Hold Period 24 months
Estimated First Distribution
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
Management

Hetal Hospitality, LLC

The personal guarantors, through Hetal Hospitality, LLC, currently own and operate two other hotels near the Chicago O'Hare Airport - a Days Inn and a La Quinta. They were the successful bidder at an auction for the Willowbrook Inn. In addition to owning and operating hotels, they also own and operate three gas stations and a convenience store.  

The primary guarantor has a net worth of $7.5 million. His credit scores range from 544 to 709. 

 

Track Record

Business Plan
Property

At A Glance

Property Type: Hotel
Investment Type: Loan Purchase
Estimated Rate of Return: 8% annualized
Estimated Hold Period: 24 months
Location: Willowbrook, IL
   
Purchase Price: $5,016,000
Loan Amount*: $3,900,000
Appraised Value: $7,150,000
Est. LTV After Repair: 55%
Protective Equity: $3,250,000

*A portion of the borrower's loan funds are disbursed through a fund controlled account serviced by a third party. As the borrower completes property improvements, the corresponding loan amounts will be funded to them. This process is in place to prevent misuse of funds and maintenance of a lien free project. 

Summary

Realty Mogul is funding $400,000 out of the $3,900,000 total loan amount. 

The borrower is purchasing the property as the successful bidder at an auction. The borrower is investing over $2,000,000 towards the purchase. Proceeds from the loan will go towards the purchase price and fund control money to finance the property improvements. The borrower intends to re-brand the property as a Wyndham Garden after the upgrades have been completed. The choice of a new brand is a negotiation with the hotel franchisor as to what improvements (if any) are required and when they will be required. The property improvement plan can span several years, but the property will be able to utilize the central reservation system while improvements are being made. To insure that the borrower obtains a flag and the downside scenario is protected, $700,000 of the loan proceeds will be withheld until he obtains a new brand for the hotel. If he is unable to obtain a new brand for the hotel, those funds will be applied to principal.

The borrower plans to obtain conventional financing after upgrades have been completed, the property has been re-branded, and operations have stabilized. The intention is that the conventional financing will be used to repay this loan.

Investors will receive interest payments of 8% with a final balloon payment at the end of the loan term.  The underlying security interest is a mortgage secured by the property in first position.  

Comparable Transactions
HOTEL NAME ADDRESS PURCHASE PRICE UNIT PRICE PER KEY YEAR BUILT/RENOVATED DATE CLOSED
Stay Inn 222 East 2nd St $3,600,000 128 $28,125 1987/2006 04/24/13
Best Western 6251 Joliet Rd $3,100,00 107 $28,972 1990 02/18/13
Hampton Inn 2222 Enterprise Dr $4,638,000 112 $41,411 1988/2007 10/22/12
Staybridge Suites 2000 Royce Blvd $7,400,00 112 $66,071 2001 06/21/12
             
Willowbrook Inn 7800 Kingery Hwy $3,900,000* 220 $17,727 1970/1978/1984  

*Fully Funded Loan Amount

Risk Mitigation*

  • There is a personal guarantee on this transaction.
  • The borrower is a real estate investor with a history and a track record of success.
  • The underlying security interest is a mortgage.**
  • The borrower loan is protected by title insurance.
  • Investor returns are not contingent on the appreciation of the hotel value and investor returns do not increase based on any resale price. The borrower is still obligated to repay the corresponding borrower loan.
  • In a worst case scenario, a foreclose is possible.  Proceeds would be distributed to investors according to the percentage of the total investment opportunity initially funded.

*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.

**An investment in this loan will be made through a borrower dependent payment note issued by Realty Mogul.  These promissory notes are dependent for payment on payments that Realty Mogul receives on the underlying borrower loan.  While the borrower loan is secured by legal title to real estate, the borrower dependent payment note is not itself secured.  

 

Location

The property is located in Willowbrook, Illinois on the east side of Kingery Highway approximately one block north of Interstate-55 and the Kingery Highway 83 exit. The 300,000 square foot site has approximately 275 feet of frontage on Kingery Highway. 

Willowbrook is a small city known for its low taxes and convenience to the metro Chicago region. Nearby points of interest include the Oak Brook regional business center, Midway International Airport, and Argonne National Laboratory. It's prime location and accessibility to many regional destinations makes it an attractive location for residents, office and commercial companies and light industrial businesses such as Turtle Wax, whose corporate headquarters are located in Willowbrook. The city is served by several hotels and retail centers, including the newly constructed Willowbrook Town Center. Residents in the city also have access to 10 community parks and the nearby Waterfall Glen Forest Preserve. 

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Disclaimers/FAQs
Disclaimers

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