The one-line goal: leave the call with WAB's path to a term sheet - structure agreed in principle, rate quoted, what they need from us named, and a date. Selection on the deal could come any day; the debt needs to be lined up early.
Opener (optional, read the energy): "Jeff, you almost got filed next to the Nigerian prince - my spam filter saw a banker offering money and refused to believe it." If it doesn't come naturally, plain works: "glad we finally connected, your emails sat in my spam for two weeks."
What Jeff has + what he proposed (verified from the email thread)
- He has: KeyCard 6/24 (sent 6/25, on the old $24.5M basis) and the KeyBook 7/9 (you attached it 7/9, current $26M basis). Your 7/9 note told him the price moved up.
- His 6/25 structure (his words, condensed): WAB capped at 65% LTC, but typically funds 65% of purchase (term loan, advances at close) plus 65% of future capex via the DLOC - drawn as the reno happens, no interest until it funds, pari passu with your 35% of each draw. His live example: $22M at close + $8M toward PIP, borrower funding $4M alongside.
- Loan minimum: your $18.4M ask "is below our minimum but close enough that I'd push for it" - and "if your PIP is more than $12K a room we'd be north of $20MM min." A bigger PIP number helps him say yes.
- Docs he named: non-recourse with carve-outs + completion guaranty + equity-contribution guaranty on the DLOC. Non-recourse base is a better posture than any bank on the board.
- Your 6/25 pitch said the PIP stays outside the loan; your 7/9 reply embraced his structure. If he pokes at the pivot: "self-funding was our default because lender draws slow us down - your version funds side-by-side without making us wait, so it fits."
His structure at our numbers (computed at his stated terms; rate = the KeyBook's 6.5% assumption until he quotes)
| PIP $4.62M (booked self) | PIP $5.3M (suite-adjusted) |
|---|
| PIP per room (his $12K/room line) | $9,702 | $11,134 |
| Term loan at close (65% of price + closing) | $17.07M | $17.07M |
| DLOC commitment (65% of PIP) | $3.00M | $3.45M |
| Total commitment (vs his $20M minimum) | $20.07M - barely clears | $20.51M - clears clean |
| Equity at close (35% of price + closing) | $9.19M | $9.19M |
| Capex equity, pari passu over the reno | $1.62M | $1.86M |
| DSCR, term loan only (adjusted NOI $4.39M) | 3.18x | 3.18x |
| DSCR fully drawn - adjusted / seller-reported NOI | 2.70x / 2.27x | 2.64x / 2.22x |
DECIDE BEFORE THE CALL - which PIP number you quote. The suite-adjusted $5.3M (yesterday's revision: real suites sub-budget + area re-pricing) is more honest for a 476-key box with 238 true suites AND clears Jeff's $20M minimum with room to spare. Recommendation: quote "self-perform budget of $5.3M, line-item backed, $11,134 a room." If you have not blessed the revision, the booked number is $4.62M - do not say both.
What to get from him (in order)
- 1. Draw mechanics - the make-or-break. "We self-perform floor by floor with our own team and factory-direct FF&E - what does a DLOC draw require from us: invoices, inspections, timing? How fast do draws fund?" If draws fund on paid invoices within days, this structure genuinely fits; if it is monthly requisitions with third-party inspection lag, that is the friction you warned him about on 6/25 - name it and ask how they handle self-GC borrowers.
- 2. Rate and fees. Term loan rate, DLOC rate (same?), unused/commitment fee on the undrawn line, origination. Also amortization and any interest-only runway on the term loan.
- 3. The guaranties, scoped. Completion guaranty - completion of WHAT scope, by when? Equity-contribution guaranty - our 35% of draws, fine. Confirm the base loan is non-recourse with standard carve-outs only.
- 4. The 65 cap - one push, then accept. "Any flex to 70 on the term loan for the right sponsor? At 70 of purchase you are still at a 19.4% debt yield on the trailing broker number ($3.53M / $18.2M) and $38,235 a key of debt." If no: his structure at 65 + capex funding is already more total proceeds than our 75/25 ask - take the win.
- 5. Timeline and process. What does committee need, how long from here to a term sheet, and can WAB move on our 45-day close if we are selected? What is missing from the KeyBook for underwriting - PFS set, REO schedule, global cash flow are ready when they engage.
- 6. The relationship close. 15 hotels, an acquisition pipeline behind this deal (two more Houston full-service REOs in the same book), deposits. "The bank that sets this structure up with us becomes the first call on everything behind it."
KeyBook figures he may probe (he has the 7/9 book)
| KeyBook line | Figure | If he probes |
|---|
| Price / keys / built | $26.0M / 476 / 1981 (26 floors) | Moved from $24.5M LOI to $26M filed best-and-final; HCAD carries improvements alone at $29M assessed. |
| Adjusted NOI (NOI Bridge) | $4,393,610 | Seller-reported $3,690,998 + $950K add-backs - $248K conservative cut. Walk any line; the two big ones below. |
| Mgmt-fee add-back | $288,358 | "Impute your standard 3% ($571,847 on T-12 revenue) anyway - coverage is still 2.60x at our 75/25 ask and 2.97x at your 65 term loan." Concede gracefully, quote the number. |
| Property-tax add-back | $340,250 | To post-protest basis: we are paying $26M arm's-length against a stale higher assessment - the protest direction is DOWN. Strongest add-back in the book. |
| Insurance add-back | $102,052 | To the bound program via Ellard ($452K to $350K) - quote reference available. |
| FF&E reserve | not carried | He will insert a 4%-of-revenue reserve ($762,463 on T-12). Fine: "put your reserve in - coverage stays above 2x on every structure on this page." Let HIM add it; never volunteer reserves or escrows. |
| Trailing DSCR / stabilized | 2.78x / 3.82x | At his 65 structure it only gets stronger (table above). Rate-stress: at 7.5% fully drawn ($1.82M debt service on $20.5M), seller-reported NOI $3.69M still covers 2.03x. |
| Lender value / LTV | $51.7M at 8.5 cap / 37.7% | If he uses a 10 cap: value $43.9M, LTV still ~44%. The LTC is the only number that looks high; the value coverage is institutional. |
| Base case revenue | 0% growth assumed | Say it unprompted: "the loan doesn't need the upside." Compset ADR $148 vs our $132 held flat is the free option. |
| Basis | $55,373/key all-in | ~$72/SF on the 414,500 SF hotel building (HCAD) - replacement cost is a multiple. |
Do not say
- Nothing about the seller-financing / bridge track or the buyer-interview process details. WAB is the conventional lane.
- No other lender or broker names, either direction.
- Never volunteer reserves, escrows, holdbacks, or lockboxes - his ideas to propose, ours to negotiate down.
- No Hilton franchise term length until written confirmation lands ("terms agreed with Hilton directly" is the line).
- One PIP number only (the one you decided above). If the broker's $15M figure comes up: "that is a market general-contractor estimate; we self-perform - different execution, real quotes behind our number."
The story spine (30 seconds, if the call needs re-grounding)
Family owned and operated, 15 hotels, zero defaults, never lost a flag. We buy hotels with bottom-line problems, not top-line problems, and we fix the margin - the SpringHill NRG assumption went from 23% to 38% margins and the lender exits whole at month 19. This one is already cash-flowing at a 17% going-in cap on our price; the base case assumes no growth. We move with certainty - $1M hard at signing, no financing contingency - which is why we line up debt before selection, and why the bank that builds this facility with us gets the pipeline behind it.
Sources: Jeff Berkman emails 6/25 + 6/29 + 7/9 (thread 19f0003c10a6c565 / 19f146adae98d7a6) and Teams invite 7/10 - structure, LTC cap, $12K/room + $20M minimum, guaranties, verbatim. KeyBook figures: H150 DoubleTree Galleria KeyBook 2026-07-09.xlsx (computed this session: adjusted NOI, DSCRs, LTV, basis). NOI Bridge lines: same file. PIP: deal_pip_lines (111 Hilton PIP-009022 lines; booked self $4,617,916) + 2026-07-13 suite-adjustment recommendation (~$5.3M, pending Ace approval). HCAD building summary per Ace pull 2026-07-13 (hotel 414,500 SF, Excellent; garage 77,076 SF). Structure math computed at Jeff's stated terms with the KeyBook's 6.5% rate assumption - rate is TBD until he quotes. Adjusted-NOI figures per THM internal accounting; seller-reported figures per broker T-12 Apr 2026 P&L.