PRIVATE OWNERS

Dispositions

Many private hotel and resort owners have spent much of their careers building and expanding their hospitality business. The time may now be ripe to partially or completely exit the operating business and redeploy the equity built up over the years into more diversified holdings. Additionally, by properly structuring an exit, sale proceeds may be distributed in a tax-advantaged manner to investors, partners, family members, charities, and other beneficiaries.

“You work hard your entire life to build something from scratch, something that we think is really special. I’ve come to the realization that it’s time for me to sit back and enjoy the rewards of all that hard work.”

Acquisitions

We evaluate properties for acquisition by bringing to bear the combined experience of our team of operations professionals, many of whom have been overseeing portfolios of hotels and resorts for decades. We are usually able to quickly identify opportunities to generate increased revenues as well as areas where expenses can be reduced to create better flow-through of profits.

Principal Investments

In those situations where we can clearly avoid a conflict of interest, and where we are usually invited to participate, we may take a principal role by personally making an investment in a hotel or resort. In such an investment, we complete a very thorough acquisition analysis to evaluate realistic internal rate of return expectations. Our goal will be to align the interests of all investors and partners in the property.

New Equity

In many cases, economic constraints prohibit owners from completely fulfilling their vision for their properties. To move a property forward, we utilize our investment experience to introduce fresh equity to a hotel or resort, usually through a passive source of funds. This allows owners to advance that vision, improve existing assets, expand their holdings, and thrive. These passive equity investors, with whom we have decades of experience, may include institutional concerns such as life insurance companies and opportunity funds, or they might be private, high-net-worth individuals or family offices. The goal of the partnership effort is to create an alignment of interests that results in a healthy, long-term association, and long-term prosperity for the property.

“Bringing in new capital allows us to harvest some of the equity we have built up over the years. We want to use that capital to expand the property and generate new revenues. We just need someone who could help us realize our potential.”

New Debt

Placing debt on a property, especially at a time when the cost of debt is attractive, allows an owner to create a “capital event” by executing a responsible and conservative financing process. Debt recapitalization provides the maximum amount of control for an owner since lenders are “passive” by nature and exert no control over how a property is operated. Using our relationships with major lenders – relationships that often date back 20 plus years – we are able to provide an array of options. We work to bring in fresh capital, usually coupled with extremely attractive terms, that affords ownership some breathing room.

Refinancing

In an organization that is stacked with seasoned veterans hailing from insurance companies and financial institutions, we use our long-standing relationships with the lender community to identify new sources of debt for properties with maturing loans. Oftentimes, the debt terms we are able to negotiate are significantly more favorable than those of the previous loan. A successful recapitalization generates higher net proceeds which allow owners to harvest some of their equity or provide them with incremental funds to renovate or expand their properties.

“My loan is maturing next year. I need to place new debt on my property, and I want to make sure that I’m getting the best deal possible from a lender that will be my partner, not my adversary.”

Restructuring of Existing Debt

Over the years we have come across numerous situations where we find loans have been in place for years at exorbitantly high rates. In some cases, those loans can’t be modified or paid off early. The only way to find out is to ask. In most cases, we have relationships with hotel lenders, usually at executive levels, which allow us to move the needle. We have also seen a great many loans held by lenders that are only too anxious to exit. The loans can often be purchased at a discount, particularly with a new source of equity, and new debt can be introduced, usually at significantly lower rates.

Asset Management

Using the combined experience of our team of operations professionals, many of whom have been overseeing portfolios of hotels and resorts for decades, we seek to uncover upside potential and eliminate value leakage. We are usually able to quickly identify opportunities to generate increased revenues, as well as areas where expenses can be reduced to create better flow-through. It is astounding how much a fresh set of eyes can enhance the overall value of the property by presenting a new vision that might encompass robust operational and physical changes that benefits ownership for the long term. We are there to prepare a specific set of action plans, guide the property staff, and mentor them – using our years of operations experience – to be better professionals and better operators.

“I don’t necessarily need someone who has all the answers, but I am looking for someone who can ask the challenging questions. You know, you operate a property for so long that sometimes you lose perspective. Having a new set of eyes and ears on how we run things will do us a world of good.”

Advisory Services

We have been around the horn a few times. Over the past 30 years, evaluating an average of 100 hotels and resorts each year, we have seen just about every type of scenario imaginable. It is this breadth of experience that gives owners and investors the confidence to bring us in as a trusted advisor and confidant, who can provide an objective and unvarnished perspective, do so discreetly, and then deliver well-founded advice and counsel. Be it a relationship issue, a personnel matter, an operational issue, a strategic decision, or simply a need to have an unbiased sounding board, we have been able to fill the need for a trusted confidant and advisor who can help owners and investors see through an issue and advance their vision.

“We’d like to have a trusted partner whose interests are aligned with ours. Someone who has a strong background in overseeing the operation of the property and who has the talent that will allow us to do great things together.”

Repurposing and Expansion

“Making the best use of our resources to create jobs and generate profits,” is the answer we often get when we ask owners what they want to do with their real estate holdings. Bringing to bear our years of seeing what works and what doesn’t, we evaluate properties to determine the best use of existing resources. Sometimes it is repurposing outlets or meeting facilities. Other times it is finding productive uses for surplus land that may have been sitting idle for years. Moreover, owners of lodging assets that have appreciated in value over the decades may be able to further enhance the value of their holdings by expanding room count, meeting spaces and ancillary amenities. We also look at possible revenue generation from the sale or leasing of real estate and existing spaces. In doing so, we employ the talents of our experienced development professionals – individuals with over 30 years of hotel and resort development, repositioning and repurposing experience. The goal, as always, is to enhance the value of the asset and generate profits for ownership.

Partnership Guidance

Owners often avail themselves of our years of operations and investment experience by inviting us into their circle as a mentor and coach. We provide unbiased advice and counsel that is based on a more global industry perspective. We help institute best practices in the way family offices, partnerships and actual property operations are structured, and assist in planning for the future by developing and implementing strategic initiatives in a collaborative effort. It is also a fact of life that sometimes people – even those with the best of intentions – have diverging visions of how to get from Point A to Point B. It happens even to family members, partners and investors who worked side-by-side for decades. We are frequently asked to enter challenged relationships in the role of impartial referee; sometimes we play the role of ombudsman and marriage counselor. In the end, the objective of our efforts is to create win-win outcomes for all parties.

PGA National Resort & Spa | Palm Beach Gardens, Florida | 379 Keys

The private owner of this well-known South Florida hotel desired to sell the resort. Following our initial assessment of the property, we recommended that several steps be implemented prior to taking the property to market. These actions included streamlining agreements with property condominium unit owners, restructuring the agreement with members of the golf club, making various physical enhancements to the property, and implementing minor changes in resort staffing.

During the process, we evaluated the tax consequences associated with a sale, especially given the owner’s low basis in the property. We then recommended a tax-advantaged exit which included a possible sale to a REIT or structuring a 1031 exchange. We ultimately sold the property for a number in excess of the owner’s expectations, and the sale proceeds were parked in a 1031 account until they could be redeployed in diverse investments including real estate, stock, and venture capital.

Sagamore Resort | Bolton Landing, New York | 290 Keys

Entering a somewhat difficult situation between two owners with diverging interests, the firm served as mediator between the families that owned this storied resort on Lake George. Key challenges included stressed operating performance, legacy issues, contentious condominium regimes, property physical condition and maturing debt. The property was successfully sold in the midst of the Lehman debacle and the beginning of the 2009 Global Recession. The property was subsequently renovated and expanded, creating renewed employment opportunities and ensuring the continuation of operations of the historic landmark.

Amelia Island Plantation | Amelia Island, Florida | 362 Keys

Amelia Island Plantation is a beachfront resort in northeast Florida. Representatives of the property engaged the firm amidst the depth of the 2009 Global Recession to assist in the restructuring of debt that had matured. Due to the declining economy and facing the threat of foreclosure, we recommended bankruptcy be considered as an option to protect the property, its employees and the future operation of the resort. After consultation with legal counsel, the Plantation filed for bankruptcy protection. With the support of both ownership and the various lenders, the firm was engaged to conduct a bankruptcy sale (under Section 363 of the Bankruptcy Code). After a fairly expedient process, the property was successfully transacted for an amount in excess of the loan balances. All lenders were made whole and ownership even received a portion of proceeds.

Rancho Bernardo Inn | San Diego, California | 287 Keys

The long-time private owners of this Southern California resort hotel engaged the firm to refinance the property. An institutional lender was introduced and the loan amount was maximized through the preparation of a detailed set of future projections. The loan proceeds were subsequently used to renovate the resort and to expand the property’s amenities and offerings.

Streamsong Resort | Bowling Green, Florida | 216 Keys

One of the largest property owners in the state of Florida engaged the firm to evaluate all options for a 16,000-acre parcel that it has owned for over 50 years. Given the unique geography of the land and the desire of the owner to create employment opportunities for a two-county region, the firm recommended the creation of an executive conference center resort. The property, situated equidistant between Tampa and Orlando, began booking business and welcoming group accounts as of January 2014. The resort consists of a 216-room resort and high-end conference center, two world-class golf courses, fishing lakes, hunting grounds and a variety of personal enrichment programs for its guests.

Ladera Resort Soufrière | St. Lucia, Lesser Antilles | 37 Keys

A family office was considering the acquisition and redevelopment of this luxury boutique hotel situated on a tropical island in the Caribbean. After evaluating the property and its potential, we recommended the repositioning and expansion of the resort. Additionally, the firm identified a potential financial partner that would provide the equity needed to enhance the property by adding rooms and a number of new amenities.