Co-Chair, HospitalityReal Estate & Land Useemail
An improved economy, easing of the credit market and uptick in occupancy and room rates have pushed the hospitality sector back into a "growth through acquisition or development" mode. During the credit crunch, Manatt's interdisciplinary hospitality law team, including lawyers from the firm's real estate and land use, environmental, restructuring, capital markets, mergers and acquisitions and litigation practices, proved their mettle by helping owners, operators, developers, lenders and investors in the hospitality, recreation and entertainment industries restructure or sell off underperforming or nonperforming assets. We also assisted clients with opportunistic buying. We expect 2013 to see many more sale transactions as well as new hotel development in key markets. However, while hospitality is definitely on an upswing, the transactions environment remains complex, with deferred capital improvements, conservative underwriting standards and lower yield expectations complicating both acquisitions and new development.
Frequently transactions involve properties with complicated structures and histories. In the fourth quarter of 2012, for example, Manatt represented international real estate investment and services company Kennedy Wilson in purchasing The Ritz-Carlton, Lake Tahoe and The Ritz-Carlton Residences, Lake Tahoe. The property is located in Northstar at Tahoe and includes a 170-room luxury hotel, 23 branded condominiums and adjacent undeveloped land entitled for additional condominiums. The transaction was completed in about six weeks. Manatt's representation drew praise from Kennedy Wilson's General Counsel, Kent Mouton, who said, "The Ritz-Carlton, Lake Tahoe acquisition was a complicated transaction with multiple moving parts. The talented and experienced Manatt team seamlessly worked together to separately review each piece of the puzzle and weave all the pieces into one comprehensive and very informative analysis of the issues and suggested solutions."
Turning Obstacles into Opportunities As a firm with Southern California roots that has seen countless environmental challenges to commercial, residential, hospitality, education, stadium, retail mall, mixed-use and infrastructure projects, Manatt has earned a reputation for being able to help clients achieve their land entitlement and development objectives in some of the state's most politically and environmentally sensitive areas. Our strong relationships with the California Coastal Commission and other regulatory bodies have been of particular benefit to developers of resort hotels and other recreational venues whose attraction to the state's most pristine, scenic and enchanting areas inevitably raises environmental concerns. From sandy shore to brownfield site, Manatt's land use, environmental and government lawyers have repeatedly demonstrated a keen ability to thread the regulatory needle in order to secure the multiple land use and site plan approvals required to execute large-scale projects.
Finding Financing Banks and insurance companies are lending again - but with tighter criteria than before the economic slowdown. Having represented parties on all sides of the financing negotiation table, Manatt has the experience and knowledge required to assist developers in securing acquisition, development and construction financing; to help owner-operators refinance existing loans or fund expansion; and to assist REITs, private equity real estate funds and other financial institutions in the acquisition and disposition of ownership interests in hospitality companies and assets, and in the structuring of mezzanine, conduit and other nontraditional financing structures.
We Can Work It Out While bankruptcy filings in the hospitality space are down, loan modifications have become commonplace and are expected to remain so as banks continue to feel pressure from the regulators to unload bad commercial real estate debt. Manatt's hospitality team has experience in loan workouts, partnership and joint venture restructures, repositioning issues, employee termination issues and renegotiation of supplier agreements.
Full-Service Capability Manatt's hospitality clients, no strangers to the buffet concept, appreciate our full-service capability, which includes negotiating development and construction contracts, ground and space leases, franchise agreements, management contracts, and service agreements; providing labor and employment advice; and resolving disputes, through arbitration or litigation, arising over lease terms, franchise agreements and employee terminations.
Recent matters handled by lawyers in Manatt's Hospitality
Practice Group include:
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