Financing and Feasibility

Representative Engagements Follow

Historically, financing for large or complicated hotels and resorts has been a specialized domain of relatively few investors and lenders. While there are definite cycles in hotel development, historically there has been a natural downward self-leveling “stickiness” to hotel financing because, among other factors, after a peak or a valley those specialized parties tended to revert back to their past practices. However, over about a ten year run starting in the mid-1990’s, money for equity and debt became more readily available (compared to historic measures), particularly from Wall Street sources. This led to an increase in the “how to” knowledge of accomplishing large/complicated hotel financing. Then in 2008, with the start of the Great Recession, financing dried up. Later, investors and lenders slowly reentered the market, particularly for branded properties.

We cannot forecast the future of the credit markets. We can say that when capital is generally available then it will likely be readily accessible by developers of large/complicated hotels. This results from the “how to” knowledge – the secret recipes no longer being secret – increasing transaction liquidity. It is certainly possible that with more smart financiers understanding the specialized economics of the business that hotel capital markets will tend to stabilize at higher levels than historically has been the case. Then again, capital markets are not unique to hotel real estate, or even to general real estate, and capital market flows are by definition disloyal structures. This implies that easy money in the hotel real estate development world is less than assured.

Straightline is highly competent in determining the economic and financing feasibility of new hotel and resort  projects, managing the process of deal structuring, and packaging and searching out equity and debt financing.

The feasibility process necessarily ties into master planning for the project, given the need to plan the optimally feasible development program.

Deal structuring typically is brought to us by the developer in a rough form.  We then adapt it to meet the needs of additional investors or lenders brought in to complete the financing.

We approach the search for additional capital as a joint exercise with the developer.  First, we prepare a sophisticated Offering Memorandum which details the project's market, master plan, and economics.  We then mine our deep contact database for prospective financing parties of interest.  When expressions of interest are received then both Straightline and the developer jointly present the case for  investment or lending. 

Some of Straightline's Financing & Feasibility Engagements follow...

• U.S. National:  Preparation of a Business Plan and Plan of Financing for development of a system of fitness, spa and entertainment membership clubs (90,000 sf prototypes).

• Hawaii:  Master Planning and financing for a proposed $100 million redevelopment of an historic outer island resort (232 timeshare units + 20 hotel cottages)

• U.S. National:  Development of financing packages on behalf of a New York investment bank for two separate real estate portfolios consisting of twenty-nine hospitality properties, in total valued at about $840 million.

• U.S. National:  Forecasting and valuation exercise for a Texas opportunity fund seeking to better understand the portfolio value for their seventeen owned hotels (about $340 million).

• U.S.A. and Canada:  Prepared detailed Plan of Financing and Rollout Scenario for a new venture seeking to acquire a dominant position in hunting and fishing lodges and in guest ranches.

• California:  Expert witness concerning the economic viability of a plan to convert and expand a Disneyland-area resort hotel into a mixed use timeshare resort development.

• California:  Acquisition advisor to a REIT seeking to acquire a premier West Coast golf resort.

• Hawaii:  Acquisition and redevelopment advisor to a California corporation seeking to acquire a very large destination resort with subsequent conversion to timesharing.

• U.S.A. And International:  Engaged in multiple instances to pursue capital raises for new construction destination resorts.

• U.S. National:  Pursued private placement capital for a pre-IPO architectural software company.

• Nevada:  Expert witness for plaintiff where damages of $163 million were sought for alleged failure of defendant to deliver on a loan commitment for plaintiff’s purchase of an 850-room hotel/casino and where defendant later acquired and flipped the property for his own gain.

• Arizona:  Value determination and acquisition strategy development concerning a small hotel for an entrepreneur.

• California:  Prepared Project Economic Study for new 204-room, $113 million, 5-star hotel in Beverly Hills.

• U.S. National:  Established three interrelated investment and technology companies on behalf of a venture capital fund.
  
  
• Midwest: Preparation of entity budgets as directed by Judge in partial determination of damages in multi-HOA disputes in large mixed use project, including a hotel.
  
  
• California:  Expert witness for defense in an instance of litigation where plaintiffs sought $115 million in damages for defendant’s failure to proceed with conversion of 145-unit bayside apartment complex into a fractional development.

• Washington:  Acquisition advisor to an entrepreneurial partnership seeking to acquire a 400-room dual-branded hotel in a $20 million transaction.
  
  
• Mexico:  Prepared study of finance ability of $100 million Los Cabos resort on a retrospective basis four years after collapse in financing for the subject property.  This was an issue in a dispute between the equity partners.

• Barbados: Pursuit of $139 million financing to allow partially built 5-star resort to complete phase I construction.

• Anguilla:  Determined diminution of value of purchased villas and condos within a 5-star resort resulting from service reductions and deferred maintenance.
  

• Missouri:  Determined proper HOA allocation methodologies in an urban mixed use project where such were in dispute among the parties.
  

• Northern California: Determined Business Interruption Damages to an Indian hotel/casino allegedly caused by construction defects.