WICHITA FALLS, TX (KAUZ) - Gatehouse Capital continues to work to secure its $20 million portion of financing on a $30 million DoubleTree hotel in Wichita Falls.
The other $10 million will be paid by the city. The local banks' inability to provide a loan that big, and banks in the metroplex still learning about the project, is making getting a loan, tough.
It does not surprise Woodbine Development Managing Partner, Dupree Scovell.
"Most people are not aware but hotels are, by far, the most complicated asset-type in commercial real estate," Scovell said.
Gatehouse Capital is a nationally recognized hotel developer that has properties in cities as big as Dallas, San Diego, and Silicon Valley to as small as Odessa and Decatur.
The Dallas based company specializes in development and redevelopment of upscale hotels in expanding markets. They build Marriott, Hyatt, Hilton and Starwood hotels.
Scovell said Gatehouse Capital has a great reputation, but that doesn't make getting a loan any easier.
"You're taking more risk than most other forms of real estate because your lease is one to two days," he said. "Whereas in an office, your lease may be five to ten years."
"Not only are you taking risk on the equity side, on the operation side of this hotel, and the pre-development risk, but now you must also take a risk on the loan side," Scovell added.
He said Gatehouse's financial struggles are coming at a time when trying to develop a hotel, especially in a city that does not have a market that is proven like Dallas or Oklahoma City, is difficult.
Scovell said lenders are more conservative now, than they used to be, because of the latest financial cycle.
"At the end of the day it's like how bad do we need this hotel, what does it mean, and what's another way to get there," he said. "And that's where you probably have to come up with a more creative financing strategy."
But Scovell believes the deal will get done.
"You go okay let's keep messaging, keep figuring out how to get there," Scovell said. "Keep seeing if there's a different way to do it. And usually, it gets done. It's just never as quick as everyone wants it to be."
Scovell said projects like these are always a challenge, and added the fact that it's so public may be making it even harder for Gatehouse Capital.
He said lenders are putting as much risk on the developers as possible and looking for an asset with a proven sponsor, brand, and demand.
He believes Gatehouse Capital provides all those qualities. For more on Gatehouse Capital's financial struggles, click here.