Key updates to the limitations on hotel demand and operations:
- In March, Santa Barbara County moved to the Red Tier in Governor Newsom’s reopening guide with Covid-19 cases continuing to drop and vaccine distribution increasing. As a result, we saw an increase in travel and bookings.
- California is now allowing all outdoor youth sports to resume creating demand from traveling college sports teams to USCB. The hotel has booked multiple competitor sports teams.
- UCSB will continue to offer most courses via remote instruction for the spring quarter. The university plans to offer an enhanced summer quarter and move to in person classes in the fall.
- We continue to see strong Spring Break leisure demand and the hotel expects to sell out a hand full of days in April forecasting to finish the month at 94% Occupancy.
Cash Flow Forecast
With the potential for monthly cash flow to be below our monthly debt service of $119,540, we will need to draw upon our operating cash reserve balance of $612,673. We are current on our debt service payments through April. The cash preservation measures at the partnership level are outlined below:
- Deferral of asset management fees and investor distributions
- Unpaid preferred return will accrue and be added to your capital account
- We will submit our PPP loan forgiveness application to PNC Bank requesting 100% forgiveness in the amount of $283,222 once they are ready to accept applications. Once submitted, the bank has 60 days to review and submit our application to the SBA. The SBA then has 90 days to review. We will provide an update in next month’s letter.
- We have applied for our 2nd PPP loan for $390,099 with PNC Bank. Our application is currently under review with the lender and SBA. This will help our 2021 cash position once received.
We expect to continue to make our loan payments, but with the reduced cash flows, investor distributions will be delayed until we see more normalized income levels.
Investor Communication
The next investor communication will be distributed by May 15, 2021.
