Financing Ground-Up Hotel and Hospitality Development Deals: Legal and Financial Issues

Navigating Completion Guaranties, GMP Construction Contracts, Ground Leases, Post-Completion Recourse, Management and Branding

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, June 28, 2016

Recorded event now available

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Program Materials

This CLE webinar will discuss legal and financial issues involved in the financing of ground-up hotel development deals. Specifically, the program will discuss completion guaranties, GMP construction contracts, impact of ground leases, reserves, post-completion recourse, management and branding.

Description

The surge in recent commercial construction projects is being driven by a wave of ground-up development, and new hotel and hospitality developments are a hot asset class in the current construction market. In addition to the debt and equity financing, other financial issues and legal hurdles must be addressed.

Developers seeking construction loans find nonrecourse debt more difficult or costly to obtain, so post-completion recourse guarantees must be factored into the financing. Construction loans may require repayment guarantees but always require completion guarantees. The loan guarantor’s risk exposure may be minimized by proper budgets, contingencies or guaranteed maximum price bids from the general contractor.

Ground leases have become a key component of ground-up hotel development, but do pose unique and complex risks for lenders and borrowers. Recognizing key differences between ground leases and other commercial leases and the impact of these differences is essential.

Listen as our authoritative panel of hotel practitioners and finance professionals analyzes key legal and financial issues that arise in ground-up hotel development deals. The panel will discuss financing challenges, completion guaranties, GMP construction contracts, impact of ground leases, reserves, post-completion recourse, management and branding.

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Outline

  1. Completion and other guaranties
  2. Guaranteed maximum price construction contracts
  3. Financing challenges
  4. Impact of ground leases
  5. Reserves
  6. Post-completion recourse
  7. Management
  8. Branding

Benefits

The panel will review these and other key issues:

  • What are they key differences between post-completion recourse and completion guaranties and what financial risks do these guarantees present?
  • What are current market conditions for ground lease financing for hotel development and what complexities do ground leases present?
  • What role does hotel management and branding play in the ability to finance the hotel development deal?

Faculty

Falik, Jonathan
Jonathan Falik

Founder and CEO
JF Capital Advisors

Mr. Falik has over 20 years of experience in the real estate and lodging sector. He has worked on numerous M&A and...  |  Read More

Tara K. Gorman
Tara K. Gorman

Partner
Perkins Coie

Ms. Gorman represents sellers, owners and licensors in the acquisition, disposition, finance, development, management...  |  Read More

Maisnik, Guy
Guy Maisnik

Partner
Jeffer Mangels Butler & Mitchell

Mr. Maisnik has nearly three decades of commercial real estate finance with a strong expertise in hotels. He is...  |  Read More

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