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Real Estate


CHESAPEAKE BAY CONFERENCE CENTER

Restructuring, Asset Management

Company Description:

  • The Chesapeake Bay Conference Center (“CBCC” or “Project”) is a 400-room conference facility with 35,000sf of banquet space, a golf course, a 150-slip marina, 7 food and beverage outlets, tennis courts, a wildlife reserve and 3 swimming pools. CBCC was opened in 2002 under the Hyatt Hotels Corporation flag with Hyatt serving as the Property Manager. CBCC was built from proceeds of a public bond offering through MEDCO.

Challenges Faced:

  • CBCC never reached expected revenue levels as forecasted in the original bond offering and was further hampered by the recession beginning in 2008. Currently, the Project is in a monetary default and has tripped various covenants, with the Bondholders consenting to a forbearance agreement.

Solutions Provided by SOLIC Professionals:

  • Prepared a Review and Assessment of the Property along with potential strategic alternatives; and, presented findings to the public Bondholders and Trustee of the bonds regarding available performance improvements, cost reductions and organizational improvements.
  • Currently monitoring the Project’s financial performance and its compliance with milestones of the extended forbearance agreement.

Result Highlights:

  • Negotiated commitment to $8 million guestroom renovation, provided strategic and financial advisory support to the Project, an ongoing monitoring role for the Trustee and Bondholders in anticipation of either an ultimate recapitalization or restructuring, and realization of performance improvements.

610 LEXINGTON IN NEW YORK

Investment Banking, Distressed Loan Sale

Company Description:

  • A large financial institution was the holder of three promissory notes with an aggregate principal amount of approximately $118 million which were secured by a senior interest in three mortgages in a sizable parcel of land in the City of New York in the Plaza District sub-market of mid-town Manhattan. The borrower acquired the site, razed the previous building and permitted the site for a 275,000 sf hotel and residential development before defaulting on the promissory notes.

Challenges Faced:

  • The Lender had pursued foreclosure proceedings on the collateral and initiated a sale of their Loan Rights. However, the foreclosure process was significantly delayed due to a lawsuit from the Borrower against the Lender. The neighboring site also held certain easement and zoning consent rights that created economic limitations and restrictions for the subject property.

Solutions Provided by SOLIC Professionals:

  • SOLIC advised the noteholders on options for maximizing recovery from the promissory notes. SOLIC provided financial and strategic advisory support including:
    • assessment of opportunities and risks related to outstanding credit agreement
    • conducting a detailed market analysis and valuation of the collateral in order to set valuation parameters
    • implementation of recovery initiatives including solicitation of competing bids for the promissory notes from developers, as well as direct negotiation with existing creditors, investors, and other stakeholder constituents

Result Highlights:

  • After identifying more than 50 interested buyers for the promissory notes and entering into discussions with 10 qualified buyers, the Borrower agreed to repurchase the notes at a valuation that was approximately 70% of principal value or over 2x the initial valuation proposed in pre-existing Lender arranged foreclosure sale bid, prior to SOLC’s retention.

SUNCAL COMPANIES

Asset Management

Company Description:

  • DE Shaw & Co. is a prominent New York Hedge Fund with over $20 billion of assets under management. DE Shaw teamed up with SunCal Companies, a leading Southern California real estate developer, by investing $500 million of debt & equity across 19 different residential development projects located within the Southern California area.

Challenges Faced:

  • Each of the developments had acquisition and development loans. As a result of the rapid decline in the U.S. housing market in 2007, these developments were unable to meet lot sale commitments and development schedules and a majority of the A&D loans were either past due or in covenant default, thereby triggering foreclosure and payment guarantees.

Solutions Provided by SOLIC Professionals:

  • Retained to engineer a successful restructuring of $500 million of debt across 19 different residential development projects located within the Southwest.
  • Provided an independent assessment of the opportunities and risks associated with the underlying valuations and restructuring alternatives, reviewed the current debt structure, developed restructuring alternatives, and negotiated with lenders.

Result Highlights:

During the course of the engagement(s), SOLIC professionals:

  • Successfully renegotiated project loans across communities in order to extend maturities and allow the hedge fund to preserve its equity interests.
  • Developed mothball budgets, funded by the equity owners, that aided in the restructuring negotiations and allowed Equity to retain ownership.
  • Negotiated resolution with respect to the DE Shaw and SunCal’s payment guarantees on the developments’ carrying cost.

PIRATES COVE

Asset Management

Company Description:

  • Pirates Cove consists of 145 acres of undeveloped land on the vacation island of Roatan, Honduras. The property is situated on the south side of the Island and includes 1,200 linear feet of frontage on the south side of the island and 3,000 linear feet of frontage along the Caribbean Sea. The size of the site is large enough to accommodate any large-scale, mixed-use resort development. The original plan for Pirates Cove was to develop the site to include a luxury resort hotel consisting of 115 hotel rooms/condos, 300 individual condominium units and 60 single family residential lots.

Challenges Faced:

  • In SOLIC’s role as CRO, Fund Manager, and Liquidating Trustee of SageCrest II LLC, a distressed $750 million hedge fund, SOLIC professionals became responsible for Pirates Cove when the Owners defaulted on loan obligations due to SageCrest.

Solutions Provided by SOLIC Professionals:

  • After various unsuccessful attempts to resolve the default with the Owners, SOLIC professionals initiated a foreclosure process to take ownership of Pirates Cove.

Result Highlights:

  • Shortly after receiving title to the Property, SOLIC worked with various local professionals and vendors to preserve, maintain, properly position, and ultimately solicit prospective buyers of the Property that was successfully sold for a substantial recovery to SageCrest.

IL LUGANO

Asset Management

Company Description:

  • The il Lugano (the “Hotel”) is a 104-room full service hotel property situated on a 1.10 acre site in Fort Lauderdale, Florida. In addition, the property has 23 condominium units on the top four floors.

Challenges Faced:

  • SageCrest (its parent hedge fund) provided a mezzanine construction loan to the original developer of the hotel who defaulted; SageCrest subsequently purchased the senior loan and completed construction.
  • The Hotel filed for Chapter 11 protection following a dispute with a management company that claimed it was due 40 years of management fees for a cancelled contract.

Solutions Provided by SOLIC Professionals:

  • Serve as the Trustee of the Hotel’s parent and as the Owner Representative, as well as the Asset Manager taking an active role in the day-to-day operations of the hotel.
  • During the course of the engagement, SOLIC professionals:
    • Took control of the property and immediately replaced key executives including the General Manager;
    • Hired a professional hotel Property Manager to provide a focused turnaround of the property with direct oversight by SOLIC professionals;
    • Restarted the sale of the remaining unsold condos resulting in 10 condo sales for $8.9 million in 24 months; and,
    • Negotiated settlements with claimants resulting in a Consensual Plan of Reorganization.

Result Highlights:

  • Drove year-over-year growth in occupancy, ADR and RevPAR, with Hotel Revenue improving by 18%, with Net Operating Income improving by 60%.
  • Orchestrated a competitive process, structured and negotiated the successful sale of il Lugano for $21.6 million to Claremont Ft. Lauderdale Suites LLC.

TAYLOR BEAN & WHITAKER MORTGAGE CORPORATION

Restructuring, Investment Banking, Asset Management

Company Description:

  • Taylor Bean & Whitaker Mortgage Corporation (‘TBW”) was the nation’s largest independent residential mortgage originator, headquartered in Ocala, Florida. The Company serviced $80 billion of mortgage loans and originated approximately $40 billion annually of mortgage loans.

Challenges Faced:

  • TBW was terminated as an approved servicer by Freddie Mac and Ginnie Mae and over $2 billion of TBW’s funds were frozen at Colonial Bank in connection with its seizure by the FDIC. TBW also owned various insurance companies, title companies, commercial real estate holdings, as well as Platinum Community Bank that was seized by the FDIC.

Solutions Provided by SOLIC Professionals:

  • Served as Chief Restructuring Officer and provided support personnel in connection with the Company’s Chapter 11 bankruptcy filing.
  • Coordinated and directed the administration of the Company’s Chapter 11 case, including assistance with respect to the preparation of bankruptcy schedules, statements of financial affairs and plan of reorganization or liquidation relating to the Company.

Result Highlights:

  • Oversaw the orderly disposition of approximately 4,500 foreclosed homes.
  • Post-bankruptcy, continue to serve as Liquidating Trustee and Chief Financial Officer.
  • Pursued significant litigation recoveries in order to maximize return to stakeholders including filing two of the largest accounting malpractice claims in history, as well as hundreds of avoidance actions.
  • Managed the wind-down, sale and transfer of $10 billion plus of mortgage loans.
  • Negotiated the resolution of significant governmental investigations and litigation matters.

DE SHAW & CO.

Restructuring

Company Description:

  • DE Shaw & Co. is a prominent New York hedge fund with over $20 billion of assets under management. DE Shaw teamed up with SunCal Companies, a leading Southern California real estate developer, by investing $500 million of debt and equity across 19 different residential development projects located within the Southern California area. Each of the developments had acquisition and development loans, predominately provided by a local California bank.

Challenges Faced:

  • As a result of the rapid decline in the U.S. housing market in 2007, these developments were unable to meet lot sale commitments and development schedules and a majority of the A&D loans were either past due or in covenant default, thereby triggering foreclosure and payment guarantees.

Solutions Provided by SOLIC Professionals:

  • Retained by DE Shaw to engineer a successful restructuring of $500 million of debt across 19 different residential development projects.

Result Highlights:

  • Successfully renegotiated project loans on each of the 19 communities in order to extend maturities and allow the hedge fund to preserve its equity interests; developed mothball budgets, funded by the equity owners, that aided in the restructuring negotiations and allowed equity stakeholders to retain ownership; and, successfully negotiated consensual resolution with respect to the DE Shaw and SunCal’s payment guarantees on certain developments’ carrying cost.

WILTON PARTNERS TOLLWAY, LLC

Restructuring

Company Description:

  • Wilton Partners is a Los Angeles based real estate developer, which was awarded the opportunity to redevelop and operate seven buildings (“Oasis”) located over or adjacent to the toll road in and around Chicago. The Toll Highway Redevelopment Project was a $120 million public-private partnership between the Illinois State Toll Highway Authority (“ISTHA”) and Wilton Partners Tollway, LLC.

Challenges Faced:

  • Wilton Partners obtained a $85 million loan facility to fund the development of the Project. However, the Company was unable to make principal or interest payments due to extended construction on the Tollways that limited access to the Oases. As a result, walk in traffic fell precipitously and several tenants were forced to default on their monthly lease obligations.

Solutions Provided by SOLIC Professionals:

  • SOLIC professionals were retained by the Company to conduct an initial review and assessment of the project’s initial underwriting, review current and historical and current financials, and the achievability of its business financial plan and the associated debt capacity and valuation implications.
  • In addition, SOLIC was tasked to assist with the following items:
    • Prepare 13-week cash flow forecast for short term liquidity requirements.
    • Assist with leasing and marketing initiatives to improve monthly rent roll and boost occupancy rates.
    • Develop restructuring scenarios to assist in negotiations with Senior Lender and government entities.
    • Monitor the project’s ongoing activities and provide status reports to equity holders after successful restructuring.

Result Highlights:

  • During the course of the engagement, SOLIC professionals negotiated:
    • A debt restructuring with Senior Lender that bifurcated the loan into two pieces, a $50 million current pay loan and a $35 million PIK loan.
    • A restructuring with Illinois State Toll Highway Authority to provide a two-year rent abatement, forgo a full year of outstanding rent for its ground lease and future CAM subsidies, and reduction to monthly reserve requirements in exchange for a percentage of future revenues tied to specific marketing initiatives.
    • Wilton Partners ability to retain ownership without an additional equity investment.
    • Negotiated a new management fee arrangement to incentivize Wilton Partners to revitalize the Project.

THE RITZ-CARLTON RESIDENCES ON BALTIMORE’S INNER HARBOR

Restructuring

Company Description:

  • The Ritz-Carlton Residences on Baltimore’s Inner Harbor is a 190-unit luxury condominium development located on Baltimore’s inner harbor with over $215 million of senior secure debt.

Challenges Faced:

  • The project had faced significant construction delays, budget overruns, stagnant sales, market compression, and management challenges. As a result, less than 25% of pre-sale contracts closed and multiple buyers demanded their deposits returned. The project had sold less than 10% of its units and the lender group was threatening to terminate construction draws and foreclose on the project. The project had a large lender group that included eight banks, many of which were foreign. In addition, the principals at the real estate firm that purchased the project also had personal guarantees outstanding against the project.

Solutions Provided by SOLIC Professionals:

  • Retained by the RXR Realty, Equity Sponsor, to conduct a review and assessment of the project’s underwriting and underlying assumptions.

Result Highlights:

  • Developed a set of operating and sales milestones that allowed the Equity Sponsor to retain ownership.
  • Negotiated a three-year extension of the senior loan.
  • Negotiated a capital budget that permitted a portion of all sales to be returned to the project.

MAJOR REAL ESTATE PRIVATE EQUITY FUND WITH OVER $15 BILLION OF REAL ESTATE ASSETS

Asset Management

Company Description:

  • A major real estate private equity fund with over $15 billion of real estate assets (“the Fund”) comprised of Class A trophy Commercial office towers.

Challenges Faced:

  • The Fund experienced a significant decline in the real estate market that led to defaults on a number of real estate loans and discontent among the Fund’s investors.

Solutions Provided by SOLIC Professionals:

  • Engaged to assist in the workout of $7 billion of senior and mezzanine debt related to 40+ Class A trophy Commercial office towers in New York, Washington, D.C., Boston, Chicago and Los Angeles.

Result Highlights:

  • On behalf of the Fund, led negotiations with major financial institutions in connection with the capital restructuring of such properties, and assisted in developing a restructured relationship between the fund manager and limited partners that allowed limited partners to maximize their recoveries.

HQ GLOBAL WORKPLACES

Restructuring, Investment Banking

Company Description:

  • HQ Global Workplaces was the leading provider of executive office space and associated services and was the largest franchisor of executive office suites in the world with revenues in excess of $400 million, senior debt of $244 million, sub-debt of $125 million and preferred equity of $220 million.

Challenges Faced:

  • The Company had grown quickly and in an undisciplined manner without adequate financial controls resulting a large number of unprofitable locations, duplicative corporate overhead and challenging client mix. The factors resulted in the Company seeking bankruptcy protection.

Solutions Provided by SOLIC Professionals:

  • Represented the senior creditors through a protracted bankruptcy proceeding.
  • Assessed the Company’s operating opportunities, including branch rationalizations and lease restructuring opportunities and worked in tandem with management to redesign the organizational structure into an entrepreneurial organization focused on P&L responsibility at the branch level.
  • Served as exclusive financial advisor for the sale of the Company.

Result Highlights:

  • Resulted in a successful reorganization in which the pre-petition senior lenders equitized their debt to take control of the Company.
  • Oversaw a full range of restructuring initiatives including: (i) sale of$20 million of non-core assets; (ii) rejection of 70+ unprofitable leases; (iii) restructuring of over 180 leases on substantially more favorable terms; and (iv) eliminating $30 million in annualized corporate overhead.
  • Recruited and selected new management team including CEO, COO, CFO, and EVP of Sales.
  • Post-bankruptcy, a SOLIC professional served as Executive Chairman of the Board, and provided oversight to the continuing operating restructuring that resulted in EBITDA improvements (from $2.4 million to $47 million run-rate).
  • Negotiated the sale of the Company to Regus LPC for $315 million resulting in significant returns to the stakeholders.

AMERICAN GOLF CORPORATION

Restructuring

Company Description:

  • American Golf Corporation (“AGC”) was the largest operator of public and private golf courses in the U.S., operating in excess of 300 golf courses.

Challenges Faced:

  • AGC went into covenant default under its unsecured bank lines as a result of the contraction of the golf industry and unfavorable leases with its affiliated National Golf Properties, a publicly traded REIT.

Solutions Provided by SOLIC Professionals:

  • Retained by AGC’s unsecured bank lenders to review the entire AGC portfolio and to assist in maximizing recoveries for its lenders.

Result Highlights:

  • Following completion of the underwriting and asset review, SOLIC professionals negotiated a transaction with AGC’s and National Golf Properties’ secured lenders and equity holders pursuant to which AGC’s unsecured bank lenders were paid in full.
  • Strategic alternatives developed on behalf of structurally subordinated lenders also resulted in 100% recovery.

Representative experience includes transactions led by SOLIC professionals at predecessor firms