distressed hotels

1. By: Scott L. Podvin, Managing Director
The Crest at Waterford Lakes, LLC
spodvin@post.harvard.edu
www.TheCrestLife.com
http://www.linkedin.com/in/sp0dvin
Tel: (305) 793-5762; Fax: (305) 665-3971
Scott L. Podvin: IMN’s Distressed Hotel Symposium – April 30- May 1, 2009

2. LEGAL & DUE DILIGENCE ISSUES TO
WATCH OUT FOR WHEN ACQUIRING
DISTRESSED HOTELS
AGENDA:
• Evaluating Exactly Why The Project Failed
• Valuation Issues
• Possible Title Complexities
• Contract Negotiation
• Assessing Local Markets
• Issues With Incomplete Projects
• Brand & Management Company Considerations
• Evaluating Real Cash Flow The Project Generates
Session Chair:
Joel Hiser, President HORWATH HOSPITALITY & LEISURE, LLC
Panel Participants:
Scott L. Podvin, Managing Director THE CREST AT WATERFORD LAKES, LLC
Patrick Deming, Managing Director EASTDIL SECURED
Howard Shapiro, President HOWARD SHAPIRO & CO.
Marv Pearlstein, Partner MANATT
David Neff, Partner PERKINS COIE

3. KINGS OF THE UNIVERSE
• Blackstone’s top-of-the-market acquisition, in
which it invested $6bn of equity, made it the
world’s biggest hotels group. Its Hilton brands
alone comprise more than 3,000 hotels and
500,000 rooms.
• Intercontinental Hotel Group, whose brands
include InterContinental, Crowne Plaza and Holiday
Inn, owns more than 4,000 hotels.
• Starwood, whose brands include St. Regis,
Sheraton, Westin, W Hotels and Aloft, is one of the
world's largest hotel operators with 897 properties,
with around 275,000 rooms.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

4. KINGS OF THE UNIVERSE CONT.
Marriott International, whose brands Accor, best known as the operator of
•
cheap and mid-range hotels, such
include:
as:
Marriott Hotels & Resorts,
•
Ibis,
•
JW Marriott Hotels & Resorts, Renaissance
•
• Mercure and
Hotels & Resorts, Courtyard by Marriott,
Residence Inn by Marriott, • Novotel a
•
Fairfield Inn by Marriott, and whose upscale hotels include:
•
Marriott Conference Centers,
Sofitel,
TownePlace Suites by Marriott, SpringHill
•
have a network of 182 hotels.
Suites by Marriott,
Marriott Vacation Club,
•
The Ritz-Carlton Hotel Company,
•
The Ritz-Carlton Club,
•
Marriott ExecuStay,
•
Marriott Executive Apartments,
•
Grand Residences by Marriott,
•
has more than 3,100 lodging
properties in the U.S. and 65
other countries and territories.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu

5. MEASURES OF HOTEL VITALITY
• OCCUPANCY
• AVERAGE DAILY
RATE (ADR)
• REVENUE PER
AVAILABLE ROOM
(REVPAR)
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

6. HOTEL MARKET
Three sources of hotel demand:
1. Tourism (individuals, groups, and
families);
2. Corporate (individuals and groups);
and
3. Government-related
demand, including contractors
Remember, 70-80% of a hotel’s performance is
systematically linked to the local economy.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

7. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

8. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

9. HOTEL OCCUPANCIES
US hotel occupancy down
12.6 % in the last week of
Feb.
2008 RevPAR decreased
•
0.8% due to a 3.7% decrease
in occupancy, the highest
annual decrease in
occupancy since 2001.
Demand is forecast to
•
decrease by 2.0%
Supply is projected to
•
increase 1.6%,
Occupancy will reduce
•
further to 58.6%, the lowest
since 1971, according to a
PWC forecast
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

10. HOLD ONTO YOUR SEAT BELTS:
ITS GONNA GET ROUGH
In 2009:
•
7.8% decrease in Occupancy
•
6.4% drop in ADR
•
13.7% fall off in RevPAR
•
30.1% decline in profits
•
This level of decline has not been
•
seen since the 1930s.
March 2009 Hotel Horizons Report by PKF Hospitality Research
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

11. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

12. How About So. Florida Hotels?
• Miami-Dade, south • Broward tax revenues fell
Florida’s largest lodging dropped 20% in Feb and
market, tax revenues from 16% in Jan
hotel guests plunged 24% • Room rates dropped 12%
in Feb and 17% in Jan. to $144/nt
• Room rates dropped twice • Occupancy dropped to
as quickly in Feb. as in 83%
January –down 14% to
$180/nt
• Occupancy dropped 11% to
73%
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

13. TRANSACTION VOLUME
FALLS OFF A CLIFF
• Market for luxury hotels has
evaporated
• “Luxury is just getting
killed,” said Bobby
Bowers, SVP at STR Global.
• Not a single top-tier hotel
traded during the last
quarter of 2008, said Patrick
Ford, president of Lodging
Econometrics
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

14. REASONS FOR DECREASING
TRANSACTION VOLUME
1.Decreasing
liquidity
2.Deteriorating
demand
fundamentals
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

15. SOME CITIES WILL ENJOY 2010
• •
Atlanta Dallas
• •
Austin Nashville
• •
Detroit Columbus
• •
Oahu Albuquerque
• •
Fort Worth Houston*
• •
Raleigh Anaheim
• •
Chicago Minneapolis
Lenders, investors, and operators should continue to be cautious
because all but the hotels in Houston are forecast to continue to report
occupancy their long-term average. March 2009 Hotel Horizons Report
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

16. HOSPITALITY IS SYMBIOTIC WITH
COMMERCIAL REAL ESTATE
• Employment and Office Demand
– Hotels proximate to office buildings tend to capture
corporate travelers
– Density of office space in a market helps determine
highest and best use of land for hotels
– Last decade, ave. 318 sf of office space absorbed for
every new job created, but in last 5 yrs, ave. decreased
to 235 sf for every new job.
– BUT…..
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

17. STATISTICAL CORRELATION
• Ratio of office sf to
total number of
hotel rooms
– Ratio of hotel rooms per
1,000 sf of net rentable
office space ranged from
only 0.21 to 0.23, w/ a mean
of 0.22
• BUT…..
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

18. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

19. THE SECRET SAUCE
• Each job creates
demand for 235 sf of
office space
• 16.6 sf of office space
creates demand for 1
occupied room night
• Thus, each new job
generates demand for
14 room nights per
annum
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

20. Relationship Between Office
and Hotel Demand
• Ratio of occupied hotel
room to occupied office
space ranges from only
0.058 to 0.064, with an
average of 0.060.
• Inverse of this ratio
shows that for every
16.6sf of occupied
office space, there was
one hotel room
occupied.
• The range of the
occupied RBA to
occupied room nights
was from 15.5 square
feet to 17.2 square feet.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

21. UNEMPLOYMENT RATE
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

22. COMMERCIAL PROPERTY MARKET
IS UNDER SIEGE
• Vacancies are expected to reach
14.7% this quarter
• Vacancies will approach 18% by year
end
according to the National Association of Realtors.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

23. OFFICE VACANCY PRIMARY MARKETS
Market 1992 Vacancy 2002 Vacancy 3Q 2008 Vacancy
New York -Mid-Town 15.0% 8.8% 6.2%
New York -Downtown 22.6% 12.1% 6.9%
San Francisco 12.4% 20.9% 10.0%
Seattle-Tacoma 16.4% 15.4% 10.1%
Los Angeles 20.5% 15.3% 10.3%
Miami 17.2% 14.3% 10.7%
Washington, D.C. 15.0% 11.2% 11.0%
Philadelphia 17.9% 12.5% 11.7%
Boston 17.8% 18.4% 11.8%
Chicago -Downtown 21.4% 15.0% 12.2%
Houston 22.0% 15.6% 12.5%
Atlanta 18.8% 18.7% 16.2%
Phoenix 20.9% 20.3% 17.3%
Chicago -Suburbs 20.8% 21.8% 19.8%
Dallas-Ft. Worth 25.1% 23.2% 21.0%
US Average 19.8% 16.0% 13.7%

24. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

25. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

26. FORECAST FOR DEFAULTS
AND BANKRUPTCIES
• Debt defaults increase at double-digit rate next 24
months
• 160 to 190 defaults in 2009
• B/n 120 and 140 in 2010
• Typically, 2 out of 3 to 3 out of 4 defaults end in
bankruptcies within 3 months.
• Thus, we are looking at:
– 150 bankruptcies in 2009 and
– 100 in 2010.
according to a bi-annual study in November 2008 by Bain Corporate Renewal Group.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

27. Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

28. BAD SITUATION GETS WORSE FOR HOTELS
• A rapidly growing number of hotels — including many
high-end and luxury properties — are forced into
bankruptcy or foreclosure in coming months, Martha C.
White reported in The New York Times.
• Jim Butler, a hotel industry lawyer, said those who
manage distressed hotel loans have told him that their
workloads have jumped tenfold in recent months.
• “Things seem to be accelerating,” Mr. Butler said, and
predicted that before the recession is over, the number
of hotels in bankruptcy or foreclosure could rise above
the 2,000 or so reached in the industry’s last big
downturn in the 1990s.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu

29. GAMBLING ON CASINO
OPERATORS
Hit by the twin blows of a recession and tight credit markets, many
gaming companies have been squeezed hard.
1. Tropicana Entertainment filed for bankruptcy
2. STATION CASINOS -- Colony owns a 75% stake in Station
Casinos Inc. while Crown owns a 19.6% interest in Fontainebleau
Equity Holdings LLC. Both have Las Vegas properties
3. Trump Entertainment Resorts, of which Mr. Trump owns
28 per cent, filed for Chapter 11 protection at a court in New Jersey
after bondholders who control the debt-laden casino operator rejected
Mr Trump’s attempt to take the company private. Mr Trump has resigned
from the board.
4. CITY CENTER--needs a combined $800 million contribution from both
partners before it can access a $1.8 billion credit facility from lenders needed to
finish construction. Australian billionaire and gambling magnate James Packer is
weighing a stake in City Center, the troubled $8.6 billion Las Vegas development
owned by MGM Mirage and Dubai World
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

30. LUXURY HOTELS
TAKE A DIP INTO THE RED
• Ritz-Carlton, Lake Las Vegas spent much of 2008 in
Chapter 11 – recently sold to 3rd owner a year.
• In Scottsdale, Ariz., 2 upscale properties entered
foreclosure in Jan. after being open for ≤ 6 months
• Greenbrier Resort in W.V. filed for Chapter 11 last
month after losing $35 million in 2008.
• In Chicago, plans for a 200-room Shangri-La hotel
were scrapped.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

31. VALUING HOTELS & RESORTS
Three valuation techniques:
1. Income approach,
2. Cost approach, and
3. Sales-comparison approach.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

32. HOTEL VALUATIONS
For the income approach, we create at least
three models:
(a) A band of investment with 3-year net income
build-up and an equity dividend;
(b) Mortgage equity with a 10-year income
projection and an equity yield; and
(c) Overall rate derived from sales of comparable
hotels.
*10-year discounted cash-flow is the preferred technique, although
in this environment cash flow forecasts are not that reliable.
*Relying on sales of comparable hotels should be avoided since the
true motivations of buyers and sellers are difficult to ascertain.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

33. DUE DILIGENCE
1. Research the Property
A. Title Encumbrances
B. Land use restrictions
C. Zoning
2. Understand the
Physical
Characteristics of the
Land
A. No substitute for site
visits
B. Topography
C. Surface water runoff
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

34. Due diligence cont-
3. Environmental Impact Study
A. Phase I
B. Phase II
4. Examine Infrastructure Needs
A. Sewage Disposal
B. Water Supply
C. Transportation – traffic studies
D. Other utilities
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

35. DUE DILIGENCE CONT.-
5. Investigate and Identify Community Stakeholders
6. Meet with Government Officials
7. Review Land Use Regulations
a. State and Local Comprehensive Plans
b. Zoning Ordinances
c. Development Ordinances
d. Subdivision/Binding Site Plan Ordinances
e. Impact Fee Ordinances
f. Other governmental regulations
8. Entitlements and Permits
9. Additional land for expansion…
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

36. CONTRACT ISSUES
• Option Agreement or Sale and Purchase
Agreement for the Site
• Contribution of the Site by the Land
Owner
• PRICE
• REPRESENTATIONS
• INDEMNITEES
• CLOSING AGENT
• TITLE AGENT
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

37. Hotel Management & Sub-
Management Agreements
Choosing the Brand
– What is the market for the condominiums, fractional
interests, condo-hotel units, yacht club membership
interests, and dockominiums to be sold?
– Which brand will fit best into the marketing plan?
– Which brand would find the asset and its location most
desirable?
– How easy is the brand to deal with?
– Which brand can be expected to deliver the highest RevPAR,
given the character of the asset and its location?
– Which brand can be expected to deliver the most for the
money?
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

38. Branded Management Contracts vs.
Franchise/Management
Branded Management Contracts FRANCHISE AGREEMENTS
1. FEES
1. FEES 2. TERM
2. CONTRIBUTIONS 3. TERMINATION ON SALE
3. BUDGET CONTROLS 4. PERFORMANCE CLAUSE
4. PERFORMANCE CLAUSE
5. TERMINATION W/O
5. TERMINATION ON SALE CAUSE
6. CORPORATE MARKETING
6. CORP MARKETING
7. TERRITORY PROTECTION
7. TERRITORY PROTECTION
8. DISPUTE RESOLUTION
8. VENUE
9. OWNER APPROVAL OF KEY
9. PROPERTY
EMPLOYEES
IMPROVEMENT PLAN
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

39. TURNAROUND
POTENTIAL
1. If poorly managed
or maintained, we
can timely
implement capital
improvement plan
to push the ADRs.
2. If none, value may
be land value or
less.
3. The availability of
financing is key to
evaluating a
distressed hotel.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

40. RISK vs. REWARD
Big hotel operators:
1. IHG,
2. Hilton,
3. Marriott, and,
4. Accor,
Reduce risk by selling
hotels in exchange for
long-term
management
agreements and/or
franchise agreements,
plus a small equity
kicker (i.e. share of
revenues).
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

41. ASSET LIGHT VS. ASSET RIGHT
• Starwood pursues a slightly nuanced asset disposal
strategy to its peers.
• While others have sold hotels and retained
management contracts and franchising of its brands
- a strategy known as asset light - Starwood has
adopted an “asset right” approach, holding onto a
slightly higher percentage of hotel assets.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

42. GREEN SHOOTS GROWING
FOR HOTEL DEALS
• The hotel sector should benefit from its position as
a favored investment for less-leveraged buyers,
such as sovereign wealth funds, high net worth
private investors and real estate investment trusts,
says Arthur de Haast, global chief executive of Jones
Lang LaSalle Hotels.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

43. NOW IS THE TIME
TO RAISE A FUND
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

44. FOUR POCKETS OF DEMAND
1.Opportunity Funds that have been established to
buy real estate equity
2.Newer Opp. Funds that have been created as
dedicated debt investors
3.Private Equity looking at real estate debt
4.Real Estate Companies buy back their own debt or
debt of others
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

45. PODVIN DEVELOPMENT GROUP
RAISING $$100MM FUND TO
PURCHASE REAL ESTATE, DISTRESSED/OPPORTUNISTIC
ASSETS
THIS FUND SHALL FOCUS ON PURCHASING THE FOLLOWING TYPES OF ASSETS/DEBT:
Strategically located developments, located in the centre of a city,
being large-scale and multi-phase developments typically consisting
City-Core
of residential, hospitality, office, retail, entertainment and cultural
Development
properties with a blend of historic restoration and modern
Projects
architecture.
Large-scale multi-family residential communities in secondary and
tertiary markets located on main and main where we can implement a
Integrated
capital improvement program to push the rents. We will be prepared to
Residential
purchase asset/debt on an all cash basis, but once the community has
Development
Projects been stabilized, we shall lever it or dispose of the asset, triggering a
repayment event.
There will be tremendous opportunities in busted condos and conversions
Broken Condos &
while value add plays will also be easy to find. Likewise, there will be many
Conversions or
Partially projects with incomplete construction that we will be able to pick up on the
Constructed cheap, complete construction and reposition the asset to create a vibrant
Communities working, walkable (with bike paths and all), sustainable and living community
for working class people.
WE ARE NOW RAISING A Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 –
$100,000,000 FUND TO May 1, 2009
PURCHASE DISTRESSED spodvin@post.harvard.edu

46. INVESTORS
1. Institutional Investors
Investors
2. Pension funds
Our Preferred
3. Insurance companies
Shares pay
4. Endowments
cumulative
5. Investment Banks
preferential cash
6. Commercial Banks
distributions at an
7. Fund of funds
annual rate of 9%.
8. Hedge Funds
9. High net worth individuals
10. Family offices
11. Sovereign wealth funds
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

47. WHAT WE DO
• We identify real
estate
opportunities
that generate
superior risk-
adjusted returns
while ensuring
capital
preservation.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

48. CORE BUSINESS FOCUS
1. Identification;
2. Acquisition;
3. Ownership; and
4. Operation of multi-family residential
and hospitality real estate properties.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

49. TYPES OF INVESTMENT
WE MAKE THE FOLLOWING TYPES OF
DEAL SIZE
INVESTMENTS:
• The ideal deal size will
• single assets and
start at US$2-25MM,
portfolios;
with a minimum equity
• Distressed mutli-family
investment of US$5
and hotel operating
million.
companies
• development or • We have capacity for
redevelopment projects; large transactions as a
• real estate operating result of co-investment
platforms; and and partnerships with
our broad institutional
• structured loans and
partnerships. client base.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

50. Investment Objectives
(1)acquire neglected multi-family residential
&/or hospitality properties; and
(2) increase profitability thru:
(a) providing superior property
management,
(b) improving appearance & environment;
(c) implementing renovation strategies;
and,
(d) cross-selling ancillary services
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

51. INVESTMENT APPROACH
Conduct thorough and comprehensive research
•
Perform ongoing review
•
Commit to strong on-the-ground presence
•
Add value by applying focused leasing & expense
•
reduction strategy
Undertake development or redevelopment plans
•
Create a tailored plan for each investment
•
Identify key milestones and profit drivers to
•
achieve the targeted result
Capital and financial structuring
•
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

52. OUR PHILOSOPHY
• DO THE RIGHT THING: Our core ethos is to quot;do the
right thing” -- responsible investment.
• ALIGNING INTERESTS: To deliver results, we
strategically structure the organization and employment
compensation plans.
• PARTNERING: Working together (within our business
and with clients & service providers), we achieve far more
than on our own.
• DELIVERING INVESTMENT EXCELLENCE:
delivering investment excellence lies at the heart of
building client confidence.
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

53. OUR STRATEGY
• Attract and retain
investors;
• Continuous
research and
innovation;
• Deliver stable
platform for growth;
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

54. REAL ESTATE
FUNDS – THE
ANATOMY OF THE
DEAL
Scott L. Podvin:
IMN’s Distressed Hotel Symposium --
April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

55. What to Look for in a
REAL ESTATE FUND
Experience
•
Skills
•
Contacts
•
Practical problem solving
•
Reputation
•
Team
•
Capacity
•
$$ Balance Sheet $$
•
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

56. THE CHEMISTRY COUNTS
Alignment of Interests:
FUND & REAL ESTATE COMPANY
• Fund Objectives
• Fund Life
• Leverage and Financing
• Guarantees
• Management Style and Control
• Tax Considerations
• Dealing with Unexpected Issues
Scott L. Podvin:
IMN’s Distressed Hotel Symposium -- April 30 – May 1, 2009
spodvin@post.harvard.edu
http://www.linkedin.com/in/sp0dvin

57. ABOUT US
• PDG is an independently managed private equity real estate
investment advisory company focused on real estate investment in
the U.S., Europe and Asia.
• Our managed investments include development and redevelopment
projects, joint-ventures and real estate operating companies in the
multifamily apartments, retail, industrial, and hotel sectors.
• We combine local knowledge of our real estate professionals with
broad global perspectives to develop our strategies and identify
investment opportunities.
• Our team of real estate professionals come from diverse
backgrounds, with the full range of skills required to invest in and
manage real estate and advise real estate funds. Our specialists
apply their skills to ensure that we drive every one of our investments
to perform at its optimum.
• PDG is independent of any broader financial services group. We can
invest funds on behalf of a number of different organizations,
including pension funds, insurance companies, government entities
and financial institutions, as well as charities and endowments.

58. • Scott L. Podvin, Managing Director of
The Crest at Waterford Lakes, LLC
• www.TheCrestLife.com
• spodvin@post.harvard.edu
• Cell: (305) 793-5762
• Fax: (305) 665-3971