Case Study: $2M Hospitality Cash-Out Refinance with a Credit Union in Ojai

The Deal That Walked in the Door

We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, and this refinance brought us an owner of a boutique hospitality property in Ojai, California looking to refinance with meaningful cash-out proceeds. The ownership held the property through a family trust and wanted a lender comfortable structuring a full-recourse loan against a hospitality asset with a flexible rate choice and no prepayment penalty. Commercial Lending Solutions specializes in credit union relationship financing and cash-out refinances for hospitality and commercial property owners across Southern California.

Ojai's boutique hospitality market draws steady visitor demand from the broader Ventura County and Santa Barbara corridor, and finding a credit union willing to size a real cash-out refinance against that operating property, rather than a strictly rate-and-term-only structure, gave the ownership meaningful flexibility.

What Made It Hard

• Choosing between two distinct rate structures. The credit union's term sheet offered a genuine choice, a lower rate with a shorter three-year fixed period against a slightly higher rate with a longer five-year fixed period, both resetting within the same overall 10-year term, requiring a real analysis of the ownership's rate risk tolerance.
• Structuring the guaranty around a family trust. With the property held in a family trust, the credit union required both an individual personal guaranty and a separate guaranty from the trust itself, along with the underlying trust documents, adding a layer of entity diligence beyond a standard individual borrower.
• Meeting a fast acceptance deadline over the holidays. With the signed term sheet due for acceptance by December 31, 2021, the ownership had to move through review and signing during a compressed year-end window.

How We Ran the Process

Trevor Damyan, a California-licensed real estate broker (CA DRE 02244836), placed the cash-out refinance with a Ventura County-based credit union, with the signed term sheet dated December 19, 2021:

• $2,000,000 secured by an individual first trust deed and assignment of rents on the hospitality property, plus a hazardous substances certificate and indemnity agreement
• A choice of two rate structures: 3.99% fixed for the first five years resetting to 5.35% for the remaining five, or 3.65% fixed for the first three years resetting to 5.65% for the remaining seven, both within a maximum 10-year term
• A 30-year amortization schedule, with principal and interest payments due monthly and any outstanding balance due at maturity
• A maximum 65% loan-to-value based on the property's as-is appraised value, subject to a minimum 1.25x annual direct debt service ratio
• No prepayment penalty for the life of the loan, on a full-recourse structure
• Dual guaranty structure: a personal guaranty from the individual owner plus a separate guaranty from the family trust holding the property, with trust documents provided as part of underwriting
• A 0.75% origination fee on the final loan amount, plus estimated appraisal, title, documentation, and environmental review fees
• Required deposit relationships: a personal savings account for the guarantor with a minimum $5 balance and a business checking account for the borrowing entity with a minimum $200 opening deposit, both maintained at the credit union for the life of the loan
• Three years of personal and business tax returns (2018-2020) including K-1s, a copy of the operating lease agreement, and year-end financial statements for both the business entity and the property required prior to funding

The refinance closed with the accepted term sheet delivering meaningful cash-out proceeds to the ownership, giving the trust a flexible rate structure with no prepayment exposure on the hospitality property.

"This deal came down to giving the ownership a real choice instead of steering them to the lower headline rate. Once we laid out both structures side by side against their actual hold period, the right answer was obvious, and the credit union was flexible enough to let them pick."

Why We Won This One

Presenting both rate options clearly, rather than defaulting the borrower to whichever structure carried the lower headline rate, is what let this ownership choose the right fit for their actual hold period. The three-year fixed option's lower initial rate came with a shorter window before resetting to a materially higher rate, a tradeoff that mattered more once weighed against the ownership's expected timeline for the property.

Coordinating the dual guaranty structure and trust documentation efficiently also mattered against the December 31 acceptance deadline. Getting the trust paperwork, individual guaranty, and business entity documents assembled and reviewed inside that compressed year-end window kept the refinance from missing its acceptance date and having to re-negotiate terms into the new year.

Is This Structure Right for Your Deal?

If you own a hospitality property held in a family trust and want cash-out proceeds with flexible rate options and no prepayment penalty, a relationship-oriented credit union can offer terms a conventional lender won't structure. We arrange permanent loans and owner-occupied commercial loans from a network of more than 1,000 capital sources.

Apply for financing or call us at 310.708.0690 to talk through your refinance.

This is one of 46 closings we have arranged across California from our Los Angeles office. See our California commercial financing page, or browse all California closed deals.

Trevor Damyan

Commercial Mortgage Broker, Commercial Lending Solutions | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.

View full profile →