Closings Spotlight

$58 Million 2200 Key Portfolio

One of Remington's most interesting and challenging deals was for one of the largest franchisees of a global hotel giant that spans six continents. The franchisee came to RFG to secure financing for a group of hotels with a total of 2,200 rooms located in Florida. From the beginning, Remington Financial Group faced seemingly insurmountable obstacles. Due primarily to their age, the hotels were unable to compete with newer properties going up nearby, and had drifted into bankruptcy. Moreover, the hotels were valued at only about $70 million, while they carried a first mortgage of about $100 million. On top of that, the hotels faced substantial and expensive environmental issues.

By the time Remington came aboard, the borrower was resigned to losing the property to the lender since no investment bank had been able to make headway for the borrower in more than 18 months of trying. Once on board, a bankruptcy court judge gave RFG just 30 days to submit a financial plan and to secure a pledge for funding.

Understanding that the lender did not wish to acquire the hotels as an asset, Remington Financial Group leveraged its solid relationship with the lender to arrange a deal that allowed the hotel owner to pay off the mortgage at a reduced rate. The reduced payout rate created a tax liability, which necessitated more funding to eliminate. Additionally, correcting the existing environmental issues required still more capital.

Remington was able to address the considerable needs of the property, while still keeping in mind the capital necessary for renovating the properties in order to make them competitive in their markets. Because of its experience funding unique properties and its strong lender relationships RFG was able to secure market rate non-recourse senior financing and participated in the mezzanine capital tier to provide a $58MM package of financing that allowed the borrower to retain 100 percent ownership in the properties and emerge from bankruptcy. The transaction closed in 45 days.