Who guarantees the Tempe Loan for the Bw Premier Collection?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
November 30, 2024
The interest rate on the Tempe Loan is a fixed annual rate of 3.50% and is computed and accrued on an ACT/360 basis. The Tempe Loan is secured by, among other things, the Deed of Trust and is guaranteed by the Company.
The Company had borrowed $15.3 million and $15.2 million as of November 30, 2024 and 2023, respectively. The current portion of $0.4 million and $0.4 million is included in accounts payable and accrued liabilities and $14.5 million and $14.8 million is included in non-current construction loans in the Consolidated Statements of Financial Position for the years ended November 30, 2024 and 2023, respectively.
Construction loan interest of $0.5 million and $0.5 million was incurred for the years ended November 30, 2024 and 2023, of which $0.0 million and $0.0 million was capitalized and included in hotel investments, net in the Consolidated Statements of Financial Position for the years ended November 30, 2024 and 2023, respectively. $0.5 million and $0.5 million of construction loan interest was expensed in interest and dividend income, and interest and other expense, net in the Consolidated Statements of Revenues and Expenses for the years ended November 30, 2024 and 2023, respectively.
The Company is required to maintain certain financial and operational covenants. At November 30, 2024 and 202
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 Bw Premier Collection Franchise Disclosure Document, the Tempe Loan is guaranteed by "the Company." The FDD also states that DevCo Tempe entered into the Tempe Loan with UMB Bank in October 2020, allowing DevCo Tempe to request advances up to $15.3 million. The loan's interest rate is fixed at 3.50% annually, computed on an ACT/360 basis, and is secured by a Deed of Trust, among other things.
This guarantee by the Company means that if DevCo Tempe defaults on the Tempe Loan, the Company is legally obligated to cover the outstanding debt. This arrangement provides security to UMB Bank, the lender, reducing their risk in providing the loan. For a prospective Bw Premier Collection franchisee, this information is relevant as it provides insight into the financial obligations and security measures undertaken by the Company.
The FDD indicates that the Company must maintain certain financial and operational covenants and was in compliance with all covenants as of November 30, 2024, and 2023. The loan requires monthly interest payments from November 1, 2020, to October 31, 2023. From November 1, 2023, until the maturity date of October 2, 2027, principal and interest are payable in an amount determined by UMB to amortize the loan over twenty-five years, with the remaining principal due on the maturity date.
Construction loan interest incurred was $0.5 million for both the years ended November 30, 2024, and 2023, with none of it being capitalized into hotel investments. This interest was expensed in interest and dividend income, and interest and other expense, net in the Consolidated Statements of Revenues and Expenses for the same periods. This financial structure and the Company's guarantee reflect the financial commitments and risk management strategies associated with the Tempe Loan.