SBA 504 Feasibility Study Case Study: Conversion of a Closed 96-Room Resort Property Near Clarkesville, Georgia to a Premium-Economy Conversion Brand, Feasible With Conditions

A closed 96-room former resort at 200 Apple Seed Court near Clarkesville, Habersham County, Georgia, offered at auction at $2,250,000, or $23,438 per room, proposed for conversion to Spark by Hilton or a comparable premium-economy conversion brand on the US-441 and GA-365 corridor between Cornelia and Clarkesville. The property has no continuity of operations, so SOP 50 10 8.1 underwrites it as a startup on projections, and the conversion is financed under SBA 504 at the 20 percent equity tier for a new business in a single-purpose building. The submarket's midscale and economy class ran 41.6 percent occupancy at a $92 rate in the year to November 2025, so the thesis is a lift from brand distribution, not from market growth. At an $8,473,400 total project cost, $88,265 per room, with a $4,236,700 bank first lien, a $2,542,000 debenture and $1,694,700 of equity, the hotel covers at 0.89x in Year 1, 1.10x in Year 2, 1.31x in Year 3 and 1.46x in Year 5 on 62 percent occupancy at a $108 rate, a 20-point occupancy lift over the submarket class that the study supports with the upper midscale set's 61.6 percent and tests to failure at 50 percent. Determination: feasible with conditions, conditioned on a building inspection confirming hotel-configured rooms, the franchisor's acceptance of the property, the lift being supported with brand-system data before closing, a funded reserve and the CDC's job-standard determination.

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

MMCG concludes that the conversion of the closed 96-room former resort at 200 Apple Seed Court near Clarkesville, Georgia to a premium-economy conversion brand is feasible with conditions. The purchase price is low, at $23,438 per room against closed sales of $40,000 to $47,000 per room for operating exterior-corridor economy hotels in small Southern markets, which is the discount a closed property with no operating history commands. The conversion scope is large, at about $54,000 per room for the systems restart, the brand's room and public area package, the exterior and the life safety work, which is roughly double the $18,000 to $35,000 per key the conversion brand's first projects reported for operating hotels, because a closed building must be restarted before it is rebranded. The two together produce an all-in cost of $88,265 per room, which is below any new-build product in the corridor and below the $94,758 per room at which an older upper midscale hotel in a small interstate market in Tennessee sold in 2025.

The credit turns on the lift. The corridor's midscale and economy class, 2,512 rooms across 120 hotels of which 70 are independent, ran 41.6 percent occupancy at a $92 rate in the year to November 2025, and a hotel that performs like that class does not cover its debt. The upper midscale set in the same corridor ran 61.6 percent at $150 in 2024, and the study carries the subject at 62 percent and $108 at stabilization: the upper midscale set's occupancy at 72 percent of its rate, which is where a renovated, brand-distributed premium-economy product prices against a 70-hotel independent base and a new Hampton, Fairfield and Home2 inventory it does not try to match on rate. On that projection the hotel covers at 1.31x in Year 3 and 1.46x in Year 5 against $577,100 of debt service on a $4,236,700 bank first lien and a $2,542,000 debenture. At 55 percent occupancy it covers at 1.05x and at 50 percent at 0.86x, and the determination therefore conditions on the lift being supported with the brand's own system data for comparable conversions before closing, on a property condition assessment confirming that the 96 rooms are hotel-configured rooms the brand will accept and that the systems restart scope is as budgeted, on the franchisor's acceptance of the property, on a $300,000 funded reserve for the Year 1 shortfall, on the CDC's determination under the job opportunity standard, and on the county's confirmation of the zoning treatment of a reopened lodging use.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly marketed property using public data, prepared to show 504 lenders, certified development companies and conversion-brand sponsors how MMCG tests a flag conversion of a closed property against the submarket, the brand's economics and the program when there is no operating history to normalize. It is not a client engagement. MMCG has no relationship with the property's owner, the auction house, the listing platform, any franchisor or any prospective buyer, and the analysis does not represent an offer, an appraisal or a recommendation to bid. Figures drawn from the listing, the December 2025 municipal hotel feasibility study for the City of Clarkesville, the Habersham County and Clarkesville millage reports, the Georgia Department of Community Affairs hotel-motel tax report and the competing hotels' brand pages are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG from industry benchmarks, including the conversion brand's published franchise terms and reported conversion costs, the 2025 and first-half 2026 operating benchmarks for economy and midscale hotels and current 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 property's building type, room configuration, year built, acreage, condition and zoning district; the competing hotels' street addresses, corridor types, current rates and assessor records; and the conversion brand's current franchise disclosure document, whose terms the study carries from secondary summaries.

The Project will operate as a franchised premium-economy hotel of 96 rooms at 200 Apple Seed Court near Clarkesville in Habersham County, Georgia, on the US-441 and GA-365 corridor that connects Cornelia, Clarkesville and the Helen tourism district, under a conversion brand of the Spark by Hilton class following the franchisor's acceptance of the property. The physical program is the existing 96-room building or buildings, restarted and renovated to the brand's conversion prototype: 96 guest rooms of standard king and double-queen configuration with the brand's bath, flooring, lighting and furniture package, a lobby with the brand's complimentary breakfast bar and 24-hour market, a fitness room, a guest laundry, surface parking for 100 vehicles, the brand's exterior color and signage package, and the mechanical, electrical, plumbing, roofing and life safety work that a closed property requires before it reopens. The hotel will operate 24 hours a day, 365 days a year, with a general manager, front desk coverage on three shifts, a breakfast attendant, a housekeeping staff sized to occupancy and a maintenance technician, for about 18 full-time equivalents at stabilization, consistent with the brand's reported staffing of about 32 for a 170-room conversion. The sponsor will hold the real estate 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 operating the hotel directly. The Project is positioned between the corridor's independent and economy hotels at $70 to $95 and its upper midscale product at $150 to $185, at $98 in its first year rising to $114 at stabilization, as the corridor's only brand-distributed premium-economy hotel.

Marketing and Sales Strategy

Pre-opening sales begins six months before reopening from the franchisor's reservation system and loyalty program, which is the primary channel and the thesis of the conversion: the brand puts the hotel in front of a loyalty base that the corridor's 70 independent hotels cannot reach. The second channel is the corridor's drive-through and leisure traffic on US-441 and GA-365 to Helen, the Chattahoochee National Forest, Tallulah Gorge and the apple and wine country, which fills the upper midscale set to 77 percent in July and 85 percent in October and leaves price-sensitive leisure demand to the economy class; the general manager prices the fall color and festival weekends at the top of the card. The third channel is the county's commercial base: the regional medical center, the poultry and manufacturing employers in Cornelia and the university in Demorest, from which the study projects about 12 percent of room nights on the municipal study's commercial demand finding. Retention runs through the loyalty program, the breakfast and the renovated product against an aging independent base.

Amenities

The subject is a closed 96-room former resort at 200 Apple Seed Court, Clarkesville, Georgia 30523, in Habersham County, offered at auction at $2,250,000 as displayed on LoopNet. The listing retrieved states the room count and the price and does not state the building type, the room configuration, the year built, the acreage or the condition, all of which the study carries as conditions of the property condition assessment. The property's name and its location on Apple Seed Court place it in the apple country between Cornelia and Clarkesville on the US-441 and GA-365 corridor, the commercial spine of Habersham County, about 10 miles from Helen and about 60 miles from Atlanta.

Habersham County had about 46,900 residents in 2023. Its commercial base comprises the regional medical center in Demorest with about 300 employees, the university in Demorest with about 300, the poultry processor in Cornelia with about 1,700 and the medical device plant in Cornelia with about 700. County visitor spending reached $69.6 million in 2024, up 6 percent, and the Northeast Georgia region's hotels ran 51.6 percent occupancy at a $170 rate in 2024. The corridor's event calendar draws more than 29,700 attendees, 75 percent of them in autumn, and the gateway segment of US-441 carries about 11,900 vehicles per day. The county's hotel-motel tax is 5 percent in the unincorporated area and the City of Clarkesville, 8 percent in Cornelia, Helen, Cleveland and White County; the county collected about $266,800 at the 5 percent rate in the most recent fiscal year reported, which implies a taxable room revenue base of about $5.3 million in the unincorporated county.

The site's liabilities are its history and its configuration. A closed property has no operating history, which places the acquisition outside the Appendix 15 historical test and in startup underwriting on projections, and a former resort may have rooms configured as condominium-style units with kitchens, multiple bedrooms or detached cabins that a conversion brand will not accept without reconfiguration. The study carries the brand's prototype on the assumption that the 96 rooms are hotel-configured, carries a $1,000,000 reconfiguration case in the sensitivities, and conditions the determination on the property condition assessment and the franchisor's acceptance.

The property lies in unincorporated Habersham County, outside the City of Clarkesville, whose zoning ordinance governs only the city. The county's zoning district for the property and the county's treatment of a reopened lodging use on a property that has been closed were not retrieved at the study date, and the study carries both as conditions: a lodging use that has been discontinued may have lost nonconforming status, and the county's confirmation that a hotel is a permitted or lawful nonconforming use on the parcel is required before closing. The conversion scope is interior and exterior renovation of existing buildings with no change of footprint, which requires building permits and the state fire marshal's review of the life safety work but no site plan hearing if the use is confirmed. The City of Clarkesville's ordinance, which does not govern the property, defines a hotel as more than 30 guest rooms with ingress and egress from all rooms through an inside lobby or office, which the study notes because the brand's and the city's definitions both assume hotel-configured rooms.

The subject's SBA eligibility finding is the transient revenue test, which a reopened hotel meets by projection: more than 50 percent of revenue from guests staying 30 days or less, with the study's projection carrying stays of 30 nights or more at under 2 percent of room nights and the operating plan offering no monthly product. Because there is no continuity of operations, SOP 50 10 8.1 permits the lender to underwrite on projections, and the Appendix 15 historical coverage floor does not apply; the Quality of Earnings requirement at a $3,000,000 business purchase price does not arise because the business purchase price is below it and the business has no earnings.

Water, sewer and electric service were in place at the operating resort; whether municipal water and sewer or on-site systems serve the property, and the condition and capacity of those systems, are within the property condition assessment, and the budget carries $150,000 of utility reconnection, meter and capacity fees inside the systems restart line with an on-site system allowance in the contingency.

Property tax is computed from the 2025 millage. Habersham County's combined general fund, hospital bond and emergency services rate is 13.067 mills, of which the general fund is 11.272, and the Habersham County School District's maintenance and operations rate is 9.122 mills, for a combined unincorporated rate of 22.189 mills applied to Georgia's 40 percent assessment ratio, or $8,876 per $1,000,000 of fair market value; the City of Clarkesville's 13.57 mills do not apply outside the city. The study carries the assessor's fair market value at $5,500,000 at stabilization for an annual tax of about $48,800, carries $42,000 in Year 1 reflecting the acquisition basis and the renovation period, and escalates 2.5 percent a year. The county's 5 percent hotel-motel tax is collected from the guest.

The trade area for a premium-economy hotel on the corridor is the drive-through and leisure traffic on US-441 and GA-365, the Helen and Tallulah tourism base, and the county's commercial generators, not the resident population. Habersham County's 46,900 residents and the adjoining White County supply the labor pool; the study builds housekeeping at $13.50 and the front desk at $14.00 from the Atlanta metropolitan and North Georgia wage evidence. The demand base is 74 percent leisure and 26 percent commercial in the corridor's upper midscale set according to the municipal study, with the leisure demand concentrated from May through October and in the autumn festival season and the commercial demand steady through the week from the medical center, the university and the Cornelia employers. The study segments the subject's demand at 70 percent leisure, 25 percent commercial and 5 percent group and contract.

The demand model counts the corridor's room nights by class and tests the subject's share against each. The corridor holds about 2,512 midscale and economy rooms across 120 hotels, 70 of them independent, which ran 41.6 percent occupancy at a $92 rate in the year to November 2025 on a decline the municipal study attributed to aging product and competition among independents. The corridor's upper midscale and upscale class ran 59.4 percent at $154 in the same period, and the five-hotel upper midscale set the municipal study tracked ran 61.6 percent at $149.96 in 2024 and 60.9 percent at $142.48 through September 2025, with a seasonal range from 49.7 percent in January to 77.0 percent in July and rates from $124 to $207. The subject's 96 rooms are about 4 percent of the midscale and economy class and about 20 percent of the upper midscale set.

The penetration thesis is that a renovated, brand-distributed premium-economy hotel takes its occupancy from the upper midscale set's price-sensitive guests and from the independent base's loyalty-program guests, not from the midscale and economy class's average. The study carries the subject at 52 percent occupancy in Year 1, 58 percent in Year 2 and 62 percent in Year 3, an occupancy index of about 100 against the upper midscale set and about 149 against the midscale and economy class, at a rate index of about 72 against the upper midscale set and about 117 against the class. The lift of about 20 points over the class is the credit's central assumption, and the study supports it with three facts: the upper midscale set's demonstrated occupancy at the same corridor, the 70-hotel independent base from which a brand-distributed product draws, and the conversion brand's own reported performance in secondary markets, which the study carries as a disclosed item because the brand's system data was not available at the study date. The upper midscale pipeline, a 75-room Fairfield in Lavonia in 2027, a 77-room Fairfield in Cleveland in 2027 and an 85-room Home2 in Lavonia in 2028, competes with the upper midscale set rather than the subject and is carried as pressure on the subject's rate rather than its occupancy.

MMCG identified five branded hotels in the corridor's Cornelia node, four in the Helen node, the Clarkesville inns and the upper midscale pipeline. Room counts, opening dates and 2024 performance are from the December 2025 municipal study and the brands' own pages where retrieved; the hotels' street addresses, corridor types, current rates and assessor records were not retrieved from primary sources for most properties and are disclosed.

Competitor Number 1

Fairfield Inn and Suites Cornelia

This 79-room upper midscale hotel (interior corridor, 10 suites, 2,392 square feet of meeting space, outdoor pool) was opened in October 2024. It is located at 160 Market Corners Drive, Cornelia, GA 30531. Its current rates were not retrieved at the study date. Real estate taxes were not retrieved at the study date. The property's dedicated land was not retrieved at the study date.

Competitor Number 2

Hampton Inn Cornelia

This 81-room upper midscale hotel (interior corridor, three floors) was opened in August 2001. It is located in Cornelia, GA 30531; the street address was not retrieved at the study date. Its current rates were not retrieved at the study date. Real estate taxes were not retrieved at the study date. The property's dedicated land was not retrieved at the study date.

Competitor Number 3

Baymont, Quality Inn and Super 8 Cornelia

These three midscale and economy hotels in Cornelia are the subject's direct competitors in class. Their room counts, addresses, corridor types and rates were not retrieved from their own sites at the study date and are disclosed. Real estate taxes were not retrieved at the study date. The properties' dedicated land was not retrieved at the study date.

Competitor Number 4

Fairfield Inn and Suites Helen

This 77-room upper midscale hotel (interior corridor, indoor pool) was opened in June 2020. It is located in Helen, GA 30545; the street address was not retrieved at the study date. Real estate taxes were not retrieved at the study date. The property's dedicated land was not retrieved at the study date.

Competitor Number 5

Hampton Inn Helen

This 67-room upper midscale hotel (interior corridor, three floors) was opened in January 1999 and affiliated with the brand in May 2020. It is located in Helen, GA 30545; the street address was not retrieved at the study date. Real estate taxes were not retrieved at the study date. The property's dedicated land was not retrieved at the study date.

Competitor Number 6

Holiday Inn Express and Suites Helen

This 86-room upper midscale hotel (interior corridor, indoor pool) was opened in September 2016. It is located at 8100 South Main Street, Helen, GA 30545. Real estate taxes were not retrieved at the study date. The property's dedicated land was not retrieved at the study date.

Competitor Number 7

Home2 Suites by Hilton Helen

This 84-suite upper midscale extended-stay hotel (interior corridor, four floors on the street side, rooftop restaurant, indoor pool) was expected to open in June 2026 and is listed as open on the brand's site. It is located at 133 Narr Weg, Helen, GA 30545. Real estate taxes were not retrieved at the study date. The property's dedicated land was not retrieved at the study date.

The Clarkesville lodging base is a 5-room bed and breakfast in the city and a 7-room motel with a restaurant at 6725 Highway 17, listed for sale at $1,350,000, neither of which competes with the subject. The pipeline is the 75-room Fairfield Inn and Suites Lavonia in February 2027, the 77-room Fairfield Inn and Suites Cleveland in August 2027 and the 85-room Home2 Suites Lavonia in July 2028, all upper midscale and all outside the subject's class. The 70 independent hotels in the corridor's midscale and economy class are the subject's source of loyalty-program share and were not individually surveyed.

The subject's rate is set inside the corridor's verified bands: above the midscale and economy class's $92 and the Delhi-style independent rates of $70 to $95, and below the upper midscale set's $142 to $150. The study carries $98 in Year 1, $103 in Year 2, $108 in Year 3, $111 in Year 4 and $114 in Year 5, a rate index of about 72 against the upper midscale set, which is where the conversion brand positions nationally against its parent company's upper midscale brands, and about 117 against the class, which a renovated and brand-distributed product supports. The seasonal card runs from about $85 in January to about $140 in October with festival weekend premiums. The national economy segment's rate fell about 9 percent in the first half of 2026 while its occupancy rose; the study's rate growth of about 4 percent a year from a low base reflects the renovation and the brand rather than the segment, and the sensitivity table tests a 10 percent rate miss. Other income, which comprises the market, guest laundry, pet fees and cancellation fees, is carried at 2 percent of rooms revenue. Lease-up concessions are not carried; the first year is carried at a lower occupancy instead.

The acquisition closes in the first quarter of 2027, the conversion runs 12 months including the systems restart and the brand's package, and the hotel reopens in the first quarter of 2028 with 2028 carried as Year 1.

The ramp is slower than a new build's because a reopened property with a new flag rebuilds its distribution from zero, and the study carries three years to stabilization. The Year 1 shortfall of $65,200 against debt service is funded from the reserve.

Location: 200 Apple Seed Court, Clarkesville, GA 30523 Size in SF (Gross): to be confirmed by the property condition assessment Rooms: 96

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $88,265 per room comprises a purchase price of $23,438 per room, a conversion scope of about $54,000 per room across the hard cost and the brand's FF&E package, and about $9,700 per room of financing, fees and reserve. The conversion scope is about double the $18,000 to $35,000 per key the brand's first conversions of operating hotels reported, because the systems restart of a closed building, the life safety work and a 10 percent contingency are inside it. The brand's $8,000 per room FF&E package is carried at the figure its 170-room suburban conversion reported. The reserve of $300,000 funds the Year 1 shortfall of $65,200 and a slower reopening.

Loan Assumptions

The 504 structure finances the real estate, the renovation as an improvement to the real estate and the long-lived FF&E; the working capital and pre-opening costs are carried in the equity and the bank's interim loan. A 7(a) structure is available at the same total but would carry a higher rate on the full balance; the 504 debenture's fixed 25-year rate is the reason the study carries it.

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 2 percent of room nights. There is no continuity of operations, so the loan is underwritten as a startup on projections and the Appendix 15 historical coverage floor does not apply. The sponsor will own and operate the hotel with no management agreement and no franchisor-affiliated manager; the conversion brand must be listed in the SBA Franchise Directory and its addendum executed.

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 job opportunity standard is one job per $95,000 of debenture for loans approved on or after October 1, 2025, which is about 27 jobs at the $2,542,000 debenture against the hotel's 18 full-time equivalents; the project therefore qualifies under the CDC's portfolio average or a public policy goal, and the study carries the energy goal of a renovation that reduces energy consumption by at least 10 percent against the building's pre-closure baseline, which a systems restart with new mechanical equipment supports and which the CDC must accept. The debenture is fixed-rate over 25 years, available because real estate is more than 51 percent of proceeds. The franchise terms are carried at the conversion brand's reported $75,000 initial fee, 5.5 percent royalty and 3.5 percent brand fund on gross rooms revenue on a 15-year term, from secondary summaries of the brand's 2024 franchise disclosure document, which the lender should verify against the current document.

The Year 3 operating budget at 62 percent occupancy and a $108 rate is built by line on a Uniform System of Accounts basis for a 96-room premium-economy hotel in Habersham County.

Gross operating profit before the management fee and fixed charges is about $1.08 million, a 45 percent margin, consistent with a breakfast-only limited-service hotel with no food and beverage department. Labor is built at $13.50 for housekeeping and $14.00 for the front desk. Franchise fees are carried at the conversion brand's contractual 5.5 percent royalty and 3.5 percent brand fund before loyalty and reservation charges carried in sales and marketing. The 3 percent management fee is carried although the sponsor will operate. Property tax reflects the 2025 unincorporated county and school millage of 22.189 mills on a $5,500,000 assessor value at the 40 percent ratio; insurance is carried at $1,150 per room for a renovated inland Georgia property 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 Year 1 shortfall of $65,200 is funded from the reserve. The hotel covers from Year 2 at 1.10x, reaches 1.31x in Year 3 and builds to 1.46x by Year 5, and its Year 3 yield on total project cost of 10.1 percent before the reserve is the return a conversion earns when the purchase price is $23,438 per room and the brand supplies the distribution.

At Year 3 rates, the hotel's fixed operating cost is $622,100, comprising administrative and general, property operations, utilities, property tax and insurance, and its variable cost is 43 percent of rooms revenue for the rooms department, franchise fees, sales and marketing, the management fee and the FF&E reserve.

The 1.25x threshold at 60.3 percent sits less than two points under the forecast, and the 1.0x threshold at 53.6 percent sits twelve points above the midscale and economy class's 41.6 percent. That is the honest statement of the credit: a hotel that performs like the corridor's economy class does not cover its debt, a hotel that performs like the corridor's upper midscale set at a 28 percent rate discount covers it at 1.31x, and the conversion's thesis is that a renovated, brand-distributed product performs like the latter.

The hotel holds coverage above 1.0x in every single-factor case and above 1.25x in none of the downside cases, which is the shape of a conversion credit at 80 percent leverage: it is adequately capitalized for a rate miss, a cost overrun or a reconfiguration, and it fails if the brand lift does not arrive. The occupancy cases are the determination's reason for conditioning on brand-system data: at 55 percent the hotel covers at 1.05x and at 50 percent it does not cover.

The determination of feasible with conditions is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the subject's building type, room configuration, year built, acreage, gross square footage, condition, utility systems and zoning district; the auction terms and whether the $2,250,000 is a reserve, an opening bid or an ask; the street addresses, corridor types, current rates and assessor records of the competing hotels, and the room counts of the Baymont, Quality Inn and Super 8 in Cornelia; the conversion brand's current franchise disclosure document, whose fee terms and conversion cost guidance the study carries from secondary summaries and 2023 to 2024 trade reporting; and the brand's system performance for comparable conversions, which is the third condition.

This model study applies the methodology described on MMCG's hotel feasibility study and hotel acquisition, conversion and PIP 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.