Hotel has been in the market for 2 years. Asking price is $8,000,000. Hotel will be renovated, branded- total cost of renovation and to be branded is $11,535.000.

They have a lender (Star Bank) willing to provide 50% of the total project cost. They also have another bank (Prize) willing to provide a mezzanine loan for the remaining 15%.

Star Bank Terms:

Interest Rate: 7%

Loan Term: 10

Points: 4 upfront

Collateral: Hotel owner by Dean Hotel investements

PrizeBank Terms:

Interest Rate: 12%

Loan Term: 5

Points: 2 upfront

Collateral: subordinated claim of the blackstone hotel

Calculate the amount of the loan from star bank, payment amount and effective interest rate.