SBA 504 Feasibility Study Case Study: An 86-Room Upper Midscale Hotel on Highway 78 in Monroe, Georgia, Feasible as Restructured

An 86-room premium limited-service hotel of the Hampton Inn, Holiday Inn Express or Fairfield Inn class proposed on a cleared 2-acre commercial parcel at 2149 Highway 78 in Monroe, Walton County, Georgia, listed at $860,000 after a $65,000 reduction, zoned B-2 where the city's ordinance permits hotels by right. The project is a new business constructing a single-purpose building, which sets the 504 borrower contribution at 20 percent, and at a $16,460,000 total project cost it opens in 2028 into a competitive set that will have absorbed 175 new rooms in Covington and Bethlehem and that the city itself intends to add to with a 90 to 100 key downtown hotel. On the 2024 municipal study's own ramp, 61 percent occupancy at a $162 rate in Year 1 rising to 73 percent at $182 in Year 5, the hotel covers at 1.10x in Year 3 and does not reach 1.25x within five years at the 20 percent minimum equity. Restructured at 30 percent equity, with a $8,230,000 bank first lien, a $3,292,000 debenture and $4,938,000 of equity, it covers at 1.25x in Year 3, 1.32x in Year 4 and 1.39x in Year 5. Determination: not feasible as proposed at 20 percent equity; feasible as restructured, conditioned on a funded reserve, a CDC job-standard determination, the city's water and sewer capacity letter and the downtown hotel being carried as supply.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 2, 2026

MMCG concludes that the proposed 86-room upper midscale hotel at 2149 Highway 78 in Monroe, Georgia is not feasible as proposed and is feasible as restructured. The parcel, the zoning and the market all support the project. The parcel is cleared, has two acres of frontage on a 24,000 vehicle per day corridor, is zoned B-2 where the City of Monroe Zoning Ordinance permits a hotel by right, and sits in a city whose branded upper midscale demand is currently accommodated in Covington, Athens and Loganville because the city has no branded interior-corridor hotel of its own. The proposal fails on the capital stack. At the 20 percent borrower contribution the program sets for a new business in a single-purpose building, and at the September 2024 municipal feasibility study's own occupancy and rate ramp, the project covers debt service at 1.10x in its third year and 1.22x in its fifth, below the 1.25x the bank and the CDC require at stabilization, because an all-in cost of about $191,000 per room financed at 2026 rates in a market whose branded rate is $150 to $160 produces a cash flow of about $1.23 million at stabilization against $1.12 million of debt service.

Restructured at 30 percent equity, with the bank first lien held at 50 percent of cost and the debenture reduced to 20 percent, the same hotel covers at 1.25x in Year 3, 1.32x in Year 4 and 1.39x in Year 5 on a stabilized rate of $172 at 70 percent occupancy, inside the $149 to $185 band the competitive set published in 2024 and below the $172 to $182 the subject needs at stabilization only in the final two projection years. The determination is conditioned on a $450,000 funded interest and operating reserve, which carries the Year 1 and Year 2 margin above 1.0x; on the CDC's written determination that the project qualifies under the job opportunity standard through the CDC's portfolio average or a public policy goal, because a $3,292,000 debenture at $95,000 per job requires 35 jobs against the hotel's 28 full-time equivalents; on a City of Monroe water and sewer capacity letter for 86 rooms; on franchise approval of the site; and on the city's own 90 to 100 key downtown hotel being carried in the competitive supply, since the municipal study that supports the demand case predates that project.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly marketed parcel using public data, prepared to show 504 lenders, certified development companies and hotel sponsors how MMCG tests a branded limited-service new build against the parcel, the ordinance, the competitive set and the program before a franchise application is filed. It is not a client engagement. MMCG has no relationship with the landowner, the listing broker, any franchisor, the City of Monroe or any prospective developer, and the analysis does not represent an offer, an appraisal or a recommendation to buy the parcel. Figures drawn from the listing, the City of Monroe Zoning Ordinance, the city's water and sewer rate schedules, the September 2024 feasibility study commissioned by the city from The Highland Group, the Walton County and City of Monroe millage resolutions, the Georgia Department of Community Affairs hotel-motel tax report and the competing hotels' own published information are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG from industry benchmarks, including the 2026 national development cost survey, 2025 and first-half 2026 operating benchmarks for upper midscale hotels and current SBA 504 debenture pricing. Items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently: in particular, the competing hotels' street addresses, corridor types and current rates from their own websites, the Walton and Newton County assessor records for those hotels, the opening status of the SpringHill Suites Covington and the Fairfield Inn and Suites Bethlehem, the city's sewer tap fee for a commercial meter and the parcel's utility service letters.

The Project will operate as a franchised upper midscale limited-service hotel of 86 rooms on the 2.0-acre parcel at 2149 Highway 78 in Monroe, Walton County, Georgia, on the US-78 corridor between the city and Loganville. The physical program comprises a four-story interior-corridor building of about 52,000 gross square feet with 86 guest rooms, 70 of them standard king and double-queen rooms of about 320 square feet and 16 of them suites of about 420 square feet, a lobby and complimentary breakfast area, an 800 square foot meeting room, an indoor pool, a fitness room, a guest laundry, a market pantry and two elevators, with 95 surface parking spaces at the ordinance's 1 space per guest room plus employee and accessible spaces, on a site plan that places the building toward the frontage and the parking to the rear. The hotel will operate 24 hours a day, 365 days a year, with a general manager, an assistant general manager and sales coordinator, a chief engineer, front desk coverage on three shifts, breakfast attendants and a housekeeping staff sized to occupancy, for about 28 full-time equivalents at stabilization. The sponsor will hold the land, the building and the operating business in a single-asset entity that borrows the bank first lien and the 504 debenture, with the principals providing the personal guarantees the program requires, and will operate the hotel under the franchise with a third-party revenue management service. The Project is positioned at the center of the competitive set, at a $162 average rate in its first year rising to $182 at stabilization, below the Fairfield and Holiday Inn Express rates in Athens and Bethlehem and above the older Hampton Inn and La Quinta product in Covington, as the only branded interior-corridor hotel inside the city limits of the county seat.

Marketing and Sales Strategy

Pre-opening sales begins nine months before opening from the franchisor's global distribution system and loyalty program, which is the primary channel for an upper midscale brand and the reason the brand's distribution strength is the first test in the study. The second channel is the city's own corporate base: the sales coordinator negotiates local negotiated rates and room blocks with the Walton County School District, Takeda, Hitachi Astemo, the Walmart distribution center and Piedmont Walton Hospital, the employers that the 2024 municipal study found sending about 17,700 room nights a year out of the city. The third channel is the event and leisure base: the county golf club, the downtown event venue and the wedding and sports tournament calendar, which the study identified as the largest single sources of unaccommodated demand. Retention runs through the brand's loyalty program and through the meeting room, which captures the small corporate and association meetings that currently leave the county.

Amenities

The parcel is a cleared 2.0-acre commercial tract at 2149 Highway 78, Monroe, Georgia 30655, in Walton County, listed through the Georgia MLS at $860,000, or $430,000 per acre, after a $65,000 reduction from $925,000. The listing describes the site as cleared prime commercial land with B-2/M-1 zoning on US-78 between Monroe and Loganville. US-78 carries about 24,000 vehicles per day on the Monroe segment and Highway 11 about 18,000, and the parcel sits on the corridor that connects the county seat to the Loganville and Snellville commercial districts and to Interstate 20 at Covington. Other commercial land on the corridor is asking $53,000 to $119,000 per acre for larger tracts and about $314,000 per acre for a 1.83-acre B-3 parcel on Double Springs Church Road with sewer, so the subject's ask is at the top of the corridor and reflects a cleared, shovel-ready site with frontage.

Monroe is the seat of Walton County, which had about 106,700 residents in 2023 and sits at the eastern edge of the Atlanta metropolitan area. The city and Loganville each have fewer than 20,000 residents. The county's employment base is diversified: the Walton County School District employs about 2,260, Takeda about 1,300, Hitachi Astemo Americas about 1,150, the Walmart distribution center about 880 and Piedmont Walton Hospital about 570, and about 114 million square feet of industrial space lies within 20 miles of the site at a 2023 vacancy of 6.6 percent. The city's hotel tax collections at the 5 percent rate were about $108,000 in the most recent fiscal year reported by the state, which implies a taxable room revenue base inside the city of about $2.2 million, or roughly the revenue of a single 50-room economy hotel at modest occupancy. Branded upper midscale demand generated in Monroe is accommodated in Covington, Athens, Loganville and Bethlehem.

The site's two liabilities are its size and the downtown pipeline. Two acres holds an 86-room four-story hotel with 95 parking spaces only with the building placed at the frontage and stormwater handled in an underground system, which the budget carries. The downtown pipeline is the larger issue: the City of Monroe bought a 1.72-acre site at 216 Davis Street in 2023, ran a request for qualifications for a downtown hotel from December 2024 to May 2025, and in January 2026 approved up to $40,000 for an architect to design a 90 to 100 room hotel there in partnership with a hospitality management company, with a SpringHill Suites described as the likely brand. That project is not committed, but the city's intent is public, and the study carries it as competitive supply in the sensitivity cases.

The City of Monroe Zoning Ordinance adopted December 10, 2024, as posted in its January 13, 2026 version, governs. Section 620 establishes the commercial districts P, B-1 Neighborhood Business, B-2 General Business and B-3 Highway Business. The Table of Commercial Land Use in Section 620.3 lists hotel as a permitted use in B-2 and B-3 and as a conditional use in B-1, motel as permitted in B-3 and conditional in B-2, and inn as permitted in B-2 and B-3. The ordinance defines a hotel as a building in which lodging is provided with ten or more guest rooms, offered to the public for compensation, and in which access to each guest room is made through interior corridors or hallways. The subject is an 86-room interior-corridor building and is a hotel within that definition, permitted by right on a B-2 parcel. The parking table requires 1 space per guest room for lodging, which the site plan meets at 95 spaces. The dimensional standards for B-2 are in Section 700.2 and were not retrieved in the version reviewed; the study assumes a four-story building is within the district's height limit and carries confirmation as a condition. The listing describes the zoning as B-2/M-1, and the study requires the zoning verification letter to confirm that the hotel footprint sits on the B-2 portion.

The 2024 ordinance replaced a 2023 ordinance whose use table the study relied on for the hotel entries; the city also adopted a character-based code for its core in December 2024, which does not apply to the US-78 corridor. The entitlement path is site plan review and a building permit with no rezoning, variance or conditional use permit, which is why the determination carries no entitlement contingency beyond the zoning verification letter and the height confirmation.

The subject's SBA eligibility finding is written into its product. More than 50 percent of revenue must come from guests staying 30 days or less; an upper midscale transient hotel with a corporate and leisure mix and no extended-stay product meets that test by projection, and the study's length-of-stay projection carries stays of 30 nights or more at under 3 percent of room nights.

Water and sewer are municipal. The City of Monroe's water connection fee schedule effective September 11, 2024 sets the connection fee for a multi-unit commercial customer at the greater of the meter-based fee or the number of units or rooms multiplied by $1,000, which for 86 rooms is $86,000 against a 2-inch meter fee of $9,880, so the rooms rule governs; a fire line tap of up to 6 inches is $3,500. The commercial sewer charge is 190 percent of the water charge; the commercial sewer tap fee was not extracted from the 2020 schedule and is carried as a $60,000 allowance. The budget carries $220,000 for water and sewer connection, tap and capacity fees and the electric service, which the city's own electric utility supplies. The city's confirmation of water and sewer capacity for 86 rooms on the US-78 corridor is a condition precedent.

Property tax is computed from the 2026 millage. The City of Monroe reduced its rate to 6.465 mills in August 2026, Walton County held its rate at 12.278 mills and the Walton County School District set 15.367 mills, for a combined in-city rate of 34.110 mills applied to Georgia's 40 percent assessment ratio, or $13,644 per $1,000,000 of fair market value. The study carries the assessor's fair market value at $11,000,000 at stabilization, below total project cost because hotel assessments in the county follow income and sales rather than cost, for an annual tax of about $150,000, or $1,744 per room, and carries $140,000 in Year 1 reflecting the partial-year assessment. The City of Monroe's 5 percent hotel-motel excise tax is collected from the guest and remitted; it does not appear in the operating statement except as the administrative cost of collection.

The trade area for an upper midscale limited-service hotel is its commercial and leisure generators, not the resident population. Walton County's 106,700 residents and its employment base supply the hotel's labor and its local corporate demand. The May 2024 occupational wage data for the Atlanta metropolitan area, which includes Walton County, place hotel desk clerks at a mean of about $14.71 an hour and the all-occupation mean at $33.73, and the study builds front desk labor at $15.50 and housekeeping at $15.00 to reflect the county's distance from the metro core and the 2026 labor market. The demand base is the employers named above, the hospital, the industrial base within 20 miles, the county golf club and the downtown event venue, and the pass-through traffic on US-78 and Highway 11. The municipal study's employer interviews identified about 17,700 potential annual room nights that leave the city, of which the event venue accounted for about 8,400, the golf club about 2,400 and Hitachi Astemo about 2,250, and segmented the demand at 65 percent commercial and 35 percent leisure.

The demand model counts the competitive set's room nights and the subject's share of them, and tests that share against the set's own occupancy. The six branded hotels in the set hold 556 rooms. They ran 78.9 percent occupancy at a $149.87 rate in 2022, 69.7 percent at $155.54 in 2023, and 69.9 percent at $152.23 through the first half of 2024, for about 141,000 occupied room nights a year on the 2023 figure. The set adds 175 rooms with the 95-room SpringHill Suites in Covington and the 80-room Fairfield Inn in Bethlehem, to 731 rooms, and the municipal study projected the set's occupancy at about 62 percent in 2027 as those rooms are absorbed, recovering to about 70 percent by 2031. The subject's 86 rooms are 10.5 percent of the 817-room set including itself; the city's 90 to 100 room downtown hotel would take the set to about 912 rooms and the subject's fair share to 9.4 percent.

The subject's penetration rests on three facts. The first is location: it is the only branded interior-corridor hotel inside the county seat, where about 17,700 identified room nights a year currently leave for Covington, Athens and Loganville; capturing 60 percent of those room nights alone fills about 34 percent of the subject's available rooms. The second is product: a new-build four-story hotel with a meeting room and an indoor pool against a set whose Covington Hampton Inn dates from 2009, its La Quinta from 2006 and its Athens Hampton Inn from 1995. The third is brand: an upper midscale flag with a loyalty program and a global distribution system in a market where the city's existing lodging is a 46-room exterior-corridor Quality Inn and a 40-room independent inn. MMCG carries the subject at 61 percent occupancy in Year 1, an occupancy index of about 98 against a set projected near 62 percent, rising to 70 percent in Year 3 and 73 percent in Year 5, an index of about 104 at stabilization; the rate index runs above 100 from opening at $162 against a set rate of about $155. The downtown hotel is carried as a sensitivity: if it opens in 2029, the study holds the subject's Year 3 occupancy at 66 percent rather than 70.

MMCG identified six operating branded hotels in the competitive set, two branded hotels under development in the set, two local properties in Monroe that do not compete for branded demand, and the city's downtown hotel in planning. Room counts, opening years and 2024 rates are from the September 2024 municipal feasibility study; the hotels' street addresses, corridor types, current rates and assessor records were not retrieved from primary sources at the study date and are disclosed below.

Competitor Number 1 Hampton Inn Covington This 105-room upper midscale hotel (interior corridor, brand standard) was opened in 2009. It is located in Covington, Newton County, GA; the street address was not retrieved at the study date. In 2024 it published $160 weekday and $140 weekend rates.

Competitor Number 2 Holiday Inn Express and Suites Covington This 110-room upper midscale hotel (102 rooms and 8 suites, interior corridor, brand standard) was opened in 2017. It is located in Covington, Newton County, GA; the street address was not retrieved at the study date. In 2024 it published $166 to $181 weekday and $157 to $167 weekend rates.

Competitor Number 3 La Quinta Inn and Suites Covington This 66-room midscale hotel (52 rooms and 14 suites, interior corridor, brand standard) was opened in 2006. It is located in Covington, Newton County, GA; the street address was not retrieved at the study date. In 2024 it published $149 to $184 weekday and $159 to $194 weekend rates.

Competitor Number 4 Hampton Inn Athens This 112-room upper midscale hotel (interior corridor, brand standard) was opened in 1995. It is located in Athens, Clarke County, GA; the street address was not retrieved at the study date. In 2024 it published $145 to $163 weekday and $160 to $178 weekend rates.

Competitor Number 5 Fairfield Inn and Suites Athens This 96-room upper midscale hotel (interior corridor, brand standard) was opened in May 2021. It is located in Athens, Clarke County, GA; the street address was not retrieved at the study date. In 2024 it published $169 to $179 weekday and $199 to $209 weekend rates.

Competitor Number 6 Holiday Inn Express and Suites Bethlehem This 67-room upper midscale hotel (interior corridor, brand standard) was opened in 2017. It is located in Bethlehem, Barrow County, GA; the street address was not retrieved at the study date. In 2024 it published $174 to $185 weekday and $184 to $218 weekend rates.

Competitor Number 7 SpringHill Suites Covington This 95-room upscale hotel was expected to open in mid-2025 according to the September 2024 municipal study; its opening was not confirmed from the brand's own site at the study date. It is located in Covington, Newton County, GA. It is carried in the competitive supply from 2025.

Competitor Number 8 Fairfield Inn and Suites Bethlehem This 80-room upper midscale hotel was expected to open in mid-2026 according to the September 2024 municipal study; its opening was not confirmed from the brand's own site at the study date. It is located in Bethlehem, Barrow County, GA. It is carried in the competitive supply from 2026.

The Quality Inn Monroe, 46 rooms with exterior corridors, and the Haven Inn and Suites, an independent 40-room interior-corridor hotel, are the city's existing lodging and do not compete for branded upper midscale demand. The Sparrow Grove Manor, a 4-room boutique hotel and wedding venue at 410 East Church Street, is listed for sale at $1,349,000 on 1.65 acres and is a venue, not a competitor. The City of Monroe's downtown hotel at 216 Davis Street, 90 to 100 rooms, is in design with no franchise commitment; it is carried as a sensitivity.

The subject's rate is set inside the verified 2024 band of the set, $140 to $218, and at its center. The municipal study projected the subject's first-year rate at $158 at 2027 price levels, or $145 at 2024 price levels, rising to $182 by 2031. MMCG shifts the opening to 2028, inflates the first-year rate to $162, and carries $167, $172, $177 and $182 in Years 2 through 5, a rate index of about 104 against the set's 2024 rate of $152 to $155 inflated at 2 percent, for a new-build product in the only underserved node of the set. The 2026 national market supports the restraint: upper midscale rate growth has run near zero while occupancy has carried the recovery, and the study's rate growth of about 3 percent a year is at the top of what the segment has achieved. Other income, which comprises the market pantry, the meeting room, guest laundry, vending and cancellation fees, is carried at 3 percent of rooms revenue. Lease-up concessions are not carried; the first year is carried at a lower occupancy instead.

Construction runs 14 months from a loan closing in the first quarter of 2027, with opening in the second quarter of 2028 and the first full year carried as 2028.

The ramp follows the national pattern for new branded limited-service hotels, which open near 58 to 61 percent occupancy with a rate index above 100 and reach RevPAR parity with their set in about 17 months, and the three-year stabilization that the empirical literature supports. Year 1 against the restructured debt service produces a thin margin of $10,000 and Year 2 a margin of $137,300; the $450,000 reserve funds the opening months and any shortfall against the as-proposed structure.

Location: 2149 Highway 78, Monroe, GA 30655 Size in SF (Gross): 52,000 Rooms: 86

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $191,395 per room sits inside the 2026 national range of about $170,000 to $197,000 per room for limited-service hotels and below the $213,000 median across all surveyed properties; land is only $10,523 per room, which is the parcel's advantage, and hard cost of $142,953 per room reflects a four-story slab-on-grade building with an indoor pool on a cleared site with no retaining or offsite work. The $450,000 reserve funds the thin Year 1 margin under the restructured case and the $120,300 Year 1 shortfall under the as-proposed case with margin for a slower opening. The debenture fees of $130,000 are carried at about 2.63 percent of the as-proposed debenture and are reduced in the restructured case.

Loan Assumptions (as proposed)

Loan Assumptions (restructured)

The restructuring holds the bank at 50 percent of cost and takes the additional equity out of the debenture, which keeps the bank's collateral position unchanged, reduces the CDC's exposure and lowers the debenture fees. The additional $1,646,000 of equity is the price of a stabilized 1.25x in a $160 rate market at 2026 construction and borrowing costs.

The Project is an eligible business under SOP 50 10 8.1 because it is a transient hotel with no extended-stay product: more than 50 percent of revenue is derived from guests who stay 30 days or less by projection, with stays of 30 nights or more carried at under 3 percent of room nights. The sponsor will own and operate the hotel, there is no management agreement, and the franchisor is not affiliated with any operator; the franchise must be listed in the SBA Franchise Directory, where brands re-certified by June 30, 2026, and the lender will require the brand's addendum. The 504 project finances the land, the building, the long-lived equipment and the soft costs of an owner-occupied business.

The borrower contribution is 20 percent because the hotel is a limited or single-purpose building and the borrower is a new business, under 13 CFR 120.910; the study carries 20 percent as proposed and 30 percent as restructured. The job opportunity standard is one job per $95,000 of debenture for loans approved on or after October 1, 2025, which is 52 jobs at the as-proposed $4,938,000 debenture and 35 jobs at the restructured $3,292,000 debenture, against the hotel's 28 full-time equivalents; the project therefore qualifies under the CDC's portfolio average or under a public policy goal, and the study carries the energy goal of a design that reduces energy consumption by at least 10 percent against the applicable code baseline, which the CDC must accept. The CDC's written determination is a condition precedent. The debenture is fixed-rate over 25 years, which the 2026 SOP permits where real estate is 51 percent or more of proceeds; the bank first lien is carried at a 25-year amortization with the bank's own term. The 504 debenture fees for fiscal 2027 are 0.50 percent upfront and 0.203 percent annually. The combined SBA exposure of $3,292,000 is well inside the $10 million limit.

The Year 3 operating budget at 70 percent occupancy and a $172 rate is built by line on a Uniform System of Accounts basis for an 86-room upper midscale hotel in Walton County.

Gross operating profit before the management fee and fixed charges is $1,758,900, a 45.2 percent margin, in line with the first-half 2026 upper midscale sample and well above the 34.8 percent all-hotel 2025 figure, because a limited-service hotel carries no food and beverage department and a rooms-heavy revenue mix. Labor is built from Atlanta metropolitan wage data at $15.00 to $15.50 an hour for housekeeping and front desk, and labor across the rooms department, administration and maintenance is about 31 percent of revenue. Franchise fees are carried at the full contractual load of 10 percent of rooms revenue, which for the upper midscale brands in the set comprises a royalty of about 6 percent and a program and marketing fee of about 4 percent, before loyalty and reservation charges carried in sales and marketing. The 3 percent management fee is carried although the sponsor will operate, because the lender underwrites a replaceable operator. Property tax reflects the 2026 combined in-city millage of 34.110 mills on a $11,000,000 assessor value at the 40 percent ratio; insurance is carried at $1,140 per room for a new sprinklered building in inland Georgia with no coastal or wildfire loading, escalating 5 percent a year. The FF&E reserve ramps from 2 percent in Year 1 to 4 percent in Year 3.

The hotel covers from its first full year at 1.01x, reaches 1.25x in Year 3 and builds to 1.39x by Year 5, and its Year 3 yield on total project cost of 8.4 percent before the reserve is the return a branded limited-service hotel earns in a $160 to $180 rate market at $191,000 per room. As proposed at 20 percent equity, the same operating projection produces coverage of 0.89x in Year 1, 1.01x in Year 2, 1.10x in Year 3, 1.17x in Year 4 and 1.22x in Year 5 against annual debt service of $1,120,700, with a Year 1 shortfall of $120,300 against the reserve; the proposal does not reach 1.25x within the projection period, and the as-proposed row is the determination.

At Year 3 rates, the restructured hotel's fixed operating cost is $953,700, comprising administrative and general, information technology, property operations, utilities, property tax and insurance, and its variable cost is 41.8 percent of rooms revenue for the rooms department, franchise fees, sales and marketing, the management fee and the FF&E reserve net of the contribution from other income.

The 1.25x threshold sits at the forecast, which is the honest statement of the restructured credit: the hotel must perform at the competitive set's 2023 occupancy, not above it, to meet the bank's test in its third year, and it clears the 1.0x test with eight points to spare. The operating break-even of 30.4 percent is the margin of safety against a demand shock; the debt service test, not the operating test, is the binding constraint, as it is for nearly every branded hotel financed in 2026.

The restructured hotel holds coverage above 1.0x in every single-factor case and above 1.25x in none of the downside cases, which is the credit's shape: it is adequately capitalized at 30 percent equity to survive the downtown hotel, a rate miss or a cost overrun, but it has no margin to absorb two of them together. The downtown hotel is the controlling sensitivity, and the determination carries it as supply rather than assuming it away. The land negotiation is nearly immaterial, because land is 5 percent of cost; the sponsor's attention belongs on the hard cost and the opening date.

The determination of not feasible as proposed and feasible as restructured is subject to the following conditions precedent on the restructured program:

The following items could not be verified from a primary source at the study date and are disclosed: the street addresses, corridor types and current midweek and weekend rates of the six operating competitors from their own websites, in place of which the study carries the room counts, opening years and 2024 rates from the September 2024 municipal study; the Walton and Newton County assessor records, parcel acreage and real estate taxes of the competitors; the opening status of the SpringHill Suites Covington and the Fairfield Inn and Suites Bethlehem; the B-2 dimensional standards in Section 700.2 of the 2024 ordinance; the commercial sewer tap fee; the parcel's utility service availability letters; and the assessor's practice for valuing a new hotel in Walton County, on which the $11,000,000 assessment assumption depends.

This model study applies the methodology described on MMCG's hotel feasibility study and SBA hotel feasibility study pages. MMCG prepares hotel feasibility studies for SBA 7(a) and 504, USDA Business and Industry and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.