Well, you don't give a lot of information about the transaction, but with a $2MM loan, I assume that the market value in the appraisal for this property is quite high. Maybe that market value is based on income approach or the land contributes a significant portion of the value? But if the replacements costs are $1MM for the building and ACV is $250,000, then the building must be in some serious disrepair. It all depends on the circumstances. Especially for a hotel - can't build much a hotel for $1MM any more. It just raises a few questions more related to safety and soundness in making sure you have a valid appraisal. Maybe all these questions have already been asked and answered.
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