I’m willing to bet most of you have never heard of Elkhorn Valley Bank. But it is the Elkhorn Valleys of the world that are helping lay the foundation for the hotel sector’s “recovery” in the United States.
In a four-sentence news release last week, Supertel Hospitality announced that Elkhorn Valley agreed to refinance Supertel’s Sleep Inn in Omaha, Nebraska, for US$3.1 million. Supertel used the US$2.5 million in proceeds from the deal to repay the mortgage on the property held by Wells Fargo Bank and to put toward the company’s revolving credit facility.
"We believe that by working closely with our lenders, involving them in the firm's overall strategy for re-positioning the company and strengthening the balance sheet, credit for seasoned hospitality assets can be obtained, even in today's difficult market," Kelly A. Walters, Supertel's president and CEO, said in a statement.
Yes, we’ve already heard that financing is on its way back—for hotels in top markets. But hotels in secondary markets need to find debt, too, and a full-scale recovery could be difficult to come by if debt deals aren’t happening on a consistent basis throughout the country.
The biggest lenders get nervous, though, when you start talking about secondary and tertiary markets. This is where banks like Elkhorn Valley, and its seven branches serving greater Norfolk, Nebraska, come in. A Big Three bank in New York might not know a lot about Omaha, but a bank like Elkhorn that opened its doors in 1943 and is a two-hour drive away probably knows quite a bit and is willing to provide credit.
A call I put in to the officials at Elkhorn Valley earlier this week was not returned by deadline today. I imagine their response would echo what Joe Epstein, founder and president of First American Realty Associates, told me a few months back: “Your best bet (for debt in U.S. secondary markets) is always going to be a lender who is local or regional.”
At the end of the day, these smaller deals involving economy or midscale properties aren’t likely to ping anyone’s radar. But it’s these deals that should provide some hope that the hotel industry is continuing to gather momentum.