Walk it off hotel condo retail case studiesDocument Transcript
Walk It Off: When Workouts Don’t Work Out An Exploration of Litigation and Bankruptcy GreenPearl Midwest: Beyond Distress May 12, 2011 Chicago Station Urban Condominium Case StudyProject Background: 150 unit urban condominium development that is 75% sold. 25% of the loan is outstanding and is 12 months past its maturity. Multiple short term extensions have been granted. 20% of the units are only framed and need to be complete. Sales are at a standstill. Borrowers have stopped supporting loan and are no longer cooperative despite their personal guarantees. Taxes and condominium assessments are not being paid.
Hotel/Condo/Retail Case StudyAsset Hotel – 200 Rooms, National Franchise, third party management, upscale property 100-one and two bedroom units with owner use restriction of 30 days per annum Retail Space – 15,000 square feet of class A, separate building Land – five acres, owned fee simpleLoan Type: Construction/mini perm Term: 36 months Loan to cost – 70% Loan Past Due – 12-months No loan payments – past 6-months Personal Guarantees Management Contract subordinate to loanDeveloper Limited Liability Company = 20% equity Managing Member – Corporation Mezzanine Investor – 10% equityOverall Project Status o Appraised value is only 90% of Loan Principal o Loan is past due 12-months o No loan payments for the past 6-months o Franchise is in default o Property taxes and transient occupancy taxes are in arrears o Hotel occupancy – 50%; ADR below projections; NOI position before debt service o Condominiums – 25% sold, owners are threatening a lawsuit related to false marketing materials o Retail – 50% leased, no cash available for tenant improvements o Notice of default has been filed o Developer is threatening to file bankruptcy if lender does not extend the loan and adjust the interest rates.