Tuesday, February 1, 2011

Richfield Adds Six Hotels to Portfolio in 2010, Opens 2011 with Three More

DENVER, CO, Feb. 1, 2011—Officials of Richfield Hospitality, a leading hotel management company, today announced that the company added six hotels to its third-party management and ownership portfolio in 2010 and has started the new year with three more.

The company has taken over management of the Sheraton Bloomington, Minn., hotel (top left photo) and will oversee a $12.5 million renovation of the hotel and convert it to the Doubletree Hotel brand. 

The company has signed contracts to acquire a full-service hotel in which it will invest 75 percent of the capital and another full-service hotel as a sliver investor.  Both hotels are located in the top 50 MSAs and are expected to close during the first quarter.  Richfield will manage both hotels.

“We met or exceeded all of our 2010 goals and are particularly encouraged by a number of new partnerships and relationships that will allow us to leverage our and our partners’ capital to aggressively acquire hotels in 2011,” said Greg Mount (middle right photo),  Richfield Hospitality president.

  “We expect to exceed our 2010 pace in 2011 and add as many as 10 properties to our portfolio both through third-party management and acquisitions/joint venture partnerships. 

“Our partners, Richfield and our parent company, City Development Limited, continue to have significant capital to deploy, ranging from structured finance to joint ventures and direct acquisitions.

Mount said third-party management will remain Richfield’s core business, although it has the flexibility and capital to provide sliver equity of up to 25 percent.

“We have added significantly to our bench strength with experienced operators like Moby Ahmed (lower left photo) and Tom Clearwater to accommodate our recent growth and our planned growth this year,” he noted.  “We are opportunistic but will grow on a deliberate, planned basis.”

Additional information about Richfield Hospitality may be found at the company’s website: http://www.richfield.com/

 Contact:  Jerry Daly or Chris Daly, (703) 435-6293

Real Estate Capital Institute Scoreboard: Washington’s Impact on Income Property Murky

CHICAGO, IL - Washington's legislative impact on income-property real estate surfaces as the hot topic (e.g., Agencies fate, Frank-Dodd).  Yet the action timeline is still not clearly defined, or not in the immediate future.

 Instead, the markets are still digging out of many problems supply/demand issues.  Meanwhile, the ownership burdens ease as capital has returned to full with a plethora of funding options resurfacing as noted below:

  • Capital sources offer more flexibility, including reducing fees, prepayment penalties and other restrictions to keep existing performing loans as well as winning new business.

  • More bridge and subordinate debt lenders return to the funding arena. Senior debt lenders cautiously allow additional leverage, although subordinate debt is more carefully scrutinized including source and uses, escrows, default provisions and remedies, etc. 

  • The competition for larger loans is pushing a number of lenders to accept smaller deals.

  • Most permanent loan spreads over treasuries staying flat since last fall, as funding sources have scant investment alternatives with similar risk profiles.  The market prefers longer-term debt instruments.

  •  As for overall pricing, 5.5% often surfaces as a floor on ten-year funds for more typical leverage deals; rate floor are rare for lower leverage, conservative loans.

  • While mortgage spreads stay the course, Treasuries are another story.  Short-term obligations are at record-wide spreads, suggesting the markets are concerned about stagflation.  Such pricing indicates that many investors believe the Fed will be more timid about raising rates, despite inflation fears, deficit spending and other global fiscal policy concerns. 

 Strong sponsorship with partially distressed portfolios voluntarily surrenders assets to lenders as if no strategic value play exists after all other reasonable options are exhausted.  Depending upon the circumstances, lenders cooperate with borrowers as long as all parties act in good faith.

The Real Estate Capital Institute's director, Jeanne Peck (top right photo), suggests, "Recovering capital markets provide fuel for accelerating loan workouts.  In general, funding sources are maintaining underwriting discipline; only truly troubled and ill-conceived projects will fail."

The Real Estate Capital Institute(r) is a volunteer-based research organization that tracks realty rates data for debt and equity yields.  The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. 

Furthermore, call the Real Estate Capital RateLine at
7RE-CAPITAL (773-227-4825) for hourly rate updates.

The   Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
Contact: Jeanne Peck, Research Director
Toll Free 800-994-RECI (7324)