L33

Case Studies

1. Development Advisory

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2. Investment Advisory

3. Disposition Advisory

4. Complex Hotel Disposition

5. Restructuring Capital Return Strategy

6. Luxury Retail Disposition
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Development Advisory

Project Overview

Client : Offshore Owner
Property Type : Industrial Development
Location : Southern California
Land Area : 80 acres

Development

  • 1,200,000 square feet of NLA
  • Speculative Development
  • Fully entitled

Scope of Services

Strategic Advisory

  • Completed a market analysis and directed economic modeling
  • Proposed and reviewed development and joint venture alternatives

Developer Selection

  • Issued RFP to qualified developers
  • Advised client in developer selection
  • Negotiated development management agreement

Ongoing Advisory

  • Oversee Developer
  • Manage construction financing broker

Investment Advisory

Project Overview

Client : Offshore Family Office
Property Type : Mixed Use
Location : National Portfolio
Assets : 20 Properties

Issues

  • Underperforming assets
  • Debt maturities & restrictive covenants
  • Poor reporting and information flow
  • Fund operating agreement that severely limits the ability of investors to exit

Scope of Services

Portfolio Review

  • Assessed strengths & weaknesses and value of each asset in the Fund
  • Provided a strategy for rebalancing the portfolio and disposing of certain properties

Management Committee Role

  • Advise the Non-Manager Members of the Fund Management Committee
  • Attend monthly Management Committee meetings
  • Review performance of Manager and advise on acquisitions, property dispositions and refinancings

Disposition Advisory

Project Overview

Client : Family Office
Property Type : Retail & Hotel
Location : Rodeo Drive, Beverly Hills
Sale Price : $200 million

Issues

  • Hotel closed during Pandemic
  • Owner’s low basis required a 1031 exchange structure
  • Sale process during Pandemic and related vandalism on Rodeo Drive
  • Redevelopment approval required by the City of Beverly Hills

Scope of Services

Disposition Strategy

  • Advised owner is selecting an investment sales broker
  • Worked with the Broker on a marketing strategy and target buyer list
  • Retained an architect to produce preliminary redevelopment plans and schematic designs

Advisory Role

  • Oversaw the Investment Sale Broker
  • Managed weekly marketing updates
  • Reviewed offers and qualifications of prospective buyers
  • Advised Owner in selecting a buyer and negotiating terms of the sale

Complex Hotel Disposition

Project Overview

Client : Joint Venture Partnership
Property Type : 400 Room Luxury Hotel with 225 Branded Condominiums
Location : Las Vegas, Nevada
Sale Price : $215 million

Issues

  • Hotel was under-performing 
  • Hotel Management Agreement was favorable to Hotel Manager in terms of performance kickouts
  • Hotel Manager had ROFO rights on sale
  • JV Owner did however have the right to terminate Hotel Manager for a fee upon sale
  • Condo owners were concerned about losing luxury branding and potential impact on value

Scope of Services

Disposition Strategy

  • In conjunction with the Broker, a strategy was developed to terminate the Manager upon sale thereby allowing potential buyers the ability to develop an aggressive proforma
  • An international marketing strategy was developed that included institutional and high net worth investors interested in trophy assets
  • Potential new managers were targeted directly and married with like minded investors
  • A comprehensive communication strategy was developed to secure condo owner support for the sale

Outcome

  • The sale process took almost a year due to the complexities of the Hotel Manager ROFO and termination process
  • The sale price reflected a 30+ multiple of PY NOI
  • Condo owners received a bundle of benefits from the incoming Luxury manager

Restructuring Capital Return Strategy

Project Overview

Client : Sovereign Wealth Fund (SWF)
Property Type : Mixed Use Project consisting of 6,000 rooms in a Resort & Casino, Luxury Hotel and Condo Hotel, 1,500 Condominiums and a Luxury Mall
Location : Las Vegas, Nevada
Development Cost : $10 billion

Issues

  • 2008 – ‘09 GFC impacted ability to raise debt capital and JV partners balance sheets
  • Potential cross default on debt threatened to send Project into Chapter 11
  • Collapse of Residential and Tourism markets impacted condo sales and Hotel revenue

Scope of Services

JV and Capital Restructure

  • Initiated action that secured finance from all parties to ensure project completion
  • Amended the JV Agreements to limit further cost overrun exposure to the SWF. Saved the SWF over $500 million
  • Secured agreement from debt banks to fund to completion
  • Amended Operating Agreement to give SWF more control over operations

Capital Return Plan

  • Developed a Plan to progressively sell off components of the asset at optimum value
  • Restructured debt agreements to enable progressive capital returns to JV partners
  • Sold: Condos in bulk, Luxury Mall at a 4.1% cap rate and Luxury Hotel at a 30x multiple

Luxury Retail Disposition

Project Overview

Client:Joint Venture Partnership
Project
:550,000 sq.ft. Luxury Mall
Location:Las Vegas, Nevada
Sale Price
:$1.115 billion

Issues

  • Lack of clarity about an Incumbent leasing manager’s role had ‘chilled’ the market and caused an earlier attempted sale to falter.
  • Mall financials were not set up in a way to facilitate transparency and efficient due diligence for a sales process.
  • Over 30% of tenants had turnover rent based leases and break clauses.
  • Retail sales were starting to soften.

Scope of Services

Disposition Strategy

  • A specialist retail broker was hired who was able to assist in converting many of the turnover based leases into firm base rent leases. The broker also brought in its property management team to prepare the financials for sale.
  • It was decided to conduct the sale process initially with just a financial buyer and once a superior bid was determined, the financial buyer was allowed to partner with an operating partner and then finalize their offer.
  • A global marketing campaign was developed and implemented.

Outcome

  • The process to prepare the asset for sale took 6 months, however resulted in enhancing the sale value by about 15%.
  • A sale was executed with a JV of two major investors for a cap rate of 4.2% and a sale value of $1.15 billion.