In the world of "ADC" financing, the loan products vary widely from lender to lender. Many lenders will provide Acquisition and Development financing, others will provide only the Development and Construction financing which requires the owner or developer to first acquire the land before obtaining development and construction financing. On the contrary, some lenders will only provide the Construction aspect of financing. Ideally, all phases of financing will be secured from the same lending or funding source. Additionally, typical construction financing will require the construction loan to be paid off upon completion of construction, meaning mini "perm" or bridge financing will be required to pay off the construction loan. Once the property stabilizes and consistently produces the necessary cash flow, the mini "perm" or bridge financing will be paid off by permanent financing. At each stage of the process i.e. construction, mini "perm," permanent, the project will need to be re-underwritten with additional costs and fees required. Although less frequently offered, some lenders will underwrite the entire project up-front, including acquisition, development, construction, mini "perm," and permanent financing, with one set of fees. This of course is the ideal scenario.

As credit tightens and hotel development projects are more heavily underwritten, ...