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

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

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


Conducted on Tuesday, August 13, 2019

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. The panel will review completion guaranties, GMP construction contracts, the impact of ground leases, reserves, post-completion recourse, management and branding.

Description

A wave of ground-up development is driving a surge in commercial construction projects, and new hotel and hospitality developments are a hot asset class in the construction market. Besides debt and equity financing, counsel must address other financial issues and legal hurdles.

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

Ground leases are a vital component of ground-up hotel development but 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 critical legal and financial issues in ground-up hotel development deals. The panel will discuss financing challenges, completion guaranties, GMP construction contracts, the 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
  9. Qualified Opportunity Zone related party transactions

Benefits

The panel will review these and other key issues:

  • What are the critical differences between post-completion recourse and completion guaranties? What financial risks do these guaranties present?
  • What are the current market conditions for ground lease financing for hotel development?
  • What are the complexities presented by ground leases?
  • What role does hotel management and branding play in the ability to finance the hotel development deal?
  • How do qualified opportunity zone investors impact the capital stack and structure strategies?

Faculty

Falik, Jonathan
Jonathan Falik

Founder and CEO
JF Capital Advisors

Mr. Falik leads the firm's hospitality business, which includes equity and debt placement, asset acquisitions and...  |  Read More

Gorman, Tara
Tara K. Gorman

Partner
Loeb & Loeb

Ms. Gorman focuses her practice on hospitality law advising clients domestically and internationally on a broad...  |  Read More

Maisnik, Guy
Guy Maisnik

Partner
Jeffer Mangels Butler & Mitchell

Guy Maisnik has over three decades of commercial real estate transactions with a strong expertise in hotels and...  |  Read More

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