Hospitality Services Through Integrated Delivery Asset Management Operational Advisory Financing Owner's Representation Hotel Dynamics, LLC 175 Waverly Avenue East Rockaway, NY 11518 (O) 516 596 2342 info@ @hoteldy.com
HOSPITALITY SERVICES Hotel Dynamics represents the hospitality industry s top experts in asset management, financing, owner s representation and construction management. Hotel Dynamics will strive to maximize the value of your investment through extensive due diligence for acquisition, rebranding and repositioning, property renovation, new construction and asset management. EXPERTISE Our Team will bring unmatched expertise to all phases of the asset s lifecycle for a wide array of clients. The process starts with conducting due diligence that will provide investors to information necessary to make the optimal acquisition or development decisions. We then focus our skills on managing the asset and formulating a plan to reposition the asset for long term profitability. In the event that the repositioning decision includes any form of construction or brand PIP, we can seamlessly plan and implement the construction and renovations necessary for ownership. VALUE DRIVEN RESULTS Hotel Dynamics will deliver quantifiable results to its clients. With asset valuations being scrutinized, bid ask spreads remaining wide and general uncertainty in the market place, we will rebuild asset value with long term strategies that creatively focus on enhancing performance. 2
OUR CLIENTS Lending Institutions Are you a lender with a hotel borrower in imminent default? Have you taken back a property and need to develop a strategic plan for the asset? Special Servicers Are you receiving more workout deals than you can currently staff or do not have the in house hospitality expertise to administer the asset? Owners Do you need to refinance your existing mortgage? Are you maximizing cash flow and able to service your mortgage? Do you need to upgrade your FF&E? Purchasers Are you planning an acquisition which requires due diligence, repositioning and renovation? Do you need to refinance your existing mortgage or obtain acquisition financing? Developers Do you need a strategic plan on how to manage or complete your project and maximize value? Operators Are you an operator looking for a different perspective on branding and pricing strategies? Brokers/Lawyers Do you have a client looking for assistance with a hotel project? Are you negotiating a management or franchise agreement for your client and need industry expertise in dealing with the brands? 3
SERVICES Hotel Dynamics is unique in that it provides single source asset management encompassing both hotel physical and financial management. Our principals have extensive knowledge of hotel construction, renovation, financial and operational controls. We bring these skills together to provide our clients a combined and comprehensive strategic plan for their assets. Asset Management Financing Operational Advisory Owner's Representation The Hotel Dynamics team can provide services in a wide to hospitality development, operations and financing. variety of areas related ASSET MANAGEMENT Strategic Planning Due Diligence Repositioning Strategy Analyzing Financials Site Visits Evaluate Personnel Evaluate Training Review Sales Plan, Capex plan and budgets OWNER S REPRESENTATION Scope Definition Project Management and Accounting Cost Estimation Project Scheduling RFP and Bid Process OPERATIONAL ADVISORY Market Feasibility Financial Review Branding Management Contract Negotiation / Review Sales and Marketing Plans FINANCING Refinancing Construction Debt Senior Debt Equity Mezzaninee Bridge Loans Hotel Dynamics is results driven and can assist ownership to: Maximize value of asset Maximize cash flow Maximize Return on Equity Return asset to profitability Minimize renovation costs Maintain physical conditionn 4
CASE STUDY Y THE N NEW YORKER HOTEL THE CHALLENGE: In 2004 the New Yorker Hotel (910 keys; 10 th largest hotel in New York; mixed use asset with approximately 50% office space and graduate studentt housing) was suffering from low and declining room revenue. With the goal of maximizing the asset s performance for the owners, our analysis was focused on determining: (i) if the asset should remain mixed use or consolidated into a single use building; (ii) whether a portion or the entire asset should be converted into residential condominiums and (iii) what type of renovation program should be performed. With simultaneous questions and challenges, the operator sought the expertise of Hotel Dynamics. RECOMMENDATIONS: As the NYC market continued with many condominium projects including hotel conversions, the team recognized that residential pricing was out of line with supply and demand fundamentals and pushed to continue operating the New Yorker Hotel as a mixed use property. Our group determined that the highest and best use based on risk/reward metrics was to: (i) continue to operate as a mixed use building that produces a diversified and stabilized income stream; (ii) avoid a 5
residential condominium component due to design structure and market risk; and (iii) renovate the existing hotel component to increase its competitiveness. SPECIFIC RENOVATION & OPERATIONAL RECOMMENDATIONS: Based on the property s location and the competitive set, we determined the hotel would perform most efficiently as a mid market competitor with a 3.5 to 4 star rating. In addition to FF&E and common area improvements, we identified various forms of infrastructure obsolescence and deferred maintenance that needed to be addressed. In particular, converting the entire building to a central HVAC system were deemed critical to the hotel s long term success and reduction of utility expenses. Operationally, on site laundry expenses and food and beverage expenses were high and warranted additional investigation. RESULTS: In 2004, prior to implementing the physical and operational changes, the hotel s average daily rate was $100. Under Hotel Dynamics leadership the hotel was renovated and fully repositioned. As a result, the hotel s ADR increased to over $250 representing an increase of 150% from its low in 2004. Additional, cost savings were realized by obtaining $700k in NYSERDA tax rebates and over $1.0MM annually through operational improvements. Avoiding a condominium conversion at an historically low market potentially saved the Owner from a catastrophic situation and the increased performance of the repositioned hotel has proven to be a dramatic and successfully cash flowing decision. 6
REPRESENTATIVE PROJECTS Boutique Hotel, New York City Owner s Representative for acquisition and branding of building near Central Park to be converted to a boutique hotel. Performed due diligence for owner during acquisition period and managed Request for Proposal for branding and management of hotel. Starwood Capital Group Due Diligence and Branding NA 2011 239 New Yorker Hotel, New York City Owner s Representative for repositioning and renovation of historic 1930 s hotel, the 10 th largest in Manhattan. Developed strategic plan for asset as well as performed operational analysis to turnaround asset from a net operating loss to a positive cash flow, significantly increasing the asset s value over a five period from 2004 till 2009. Holy Spirit Association Owner s Representative Renovation Management $58,000,,000 2009 910 and Asset 7
Marriott Hotel, Uniondale, NY Owner s Representative for due diligence, negotiation of purchase and renegotiation of Marriott management contract. Worked on strategic plan for asset as part of overall Master Plan for Nassau Coliseum site located next door whichh same owner controlled. Worked with Marriott on defining Property Improvement Plan requirements and implementation. Northern Bay Management Group, LLC / Renaissance Properties / Charles Wang Owner s Representative - Purchase and Asset Management $90,000,,000 2006 684 Old Bethpage Hotel, Plainview, NY Owner s Representative for due diligence, purchase and negotiation of Hyatt management contract. Worked on strategic plan for asset as part of overall Master Plan for 166 acre Old Plainview mixed-use site. Worked with architect and Hyatt on defining hotel program portion of project through schematic phase. Northern Bay Management Group, LLC / Renaissance Properties / Charles Wang Owner s Representative - Preconstruction $50,000,,000 2006 8
Albany Hotel, Albany, NY Owner s Representative for pre-construction phase and negotiation of Embassy Suites franchise agreement. Original Dewitt Clinton hotel is located in historic district and eligible for historic tax credits. Worked on strategic plan for asset and constructionn financing including with State Historic Preservation Office and historic restoration advisors. Worked with architect and Hilton on defining hotel program through schematic phase. C&Y Realty, LLC Owner s Representative - Preconstruction $44,000,,000 2006 Currently In Pre-construction Phase Surfside Hotel, Surfside, FL Owner s Representative for pre-construction coordinating entitlements and design team. Coordinated branding and negotiations with brand technical services. Developed financial proformas and budgets for purposes of financing. Transacta Developers Owner s Representative - Preconstruction $50,000,,000 Currently In Pre-construction Phase Currently In Pre-construction Phase 9
Fort Lauderdale Hotel, Fort Lauderdale, FL Owner s Representative for pre-construction coordinating entitlements and design team. Coordinated branding and negotiations with brand technical services. Developed financial proformas and budgets for purposes of financing. Transacta Developers Owner s Representative - Preconstruction Renovationn Cost: $20,000,,000 Currently In Pre-construction Phase Currently In Pre-construction Phase Poughkeepsie Hotel, Poughkeepsie, NY Owner s Representative for pre-construction coordinating entitlements and design team for late 1800 s historic building restoration. Worked with historic advisor on coordination of renovation plan. Developed financial proformas and budgets for purposess of financing. Hudson Heritage Owner s Representative - Preconstruction $16,000,,000 50-100 10
Liberty Harbor Hotel, Brunswick, GA Owner s Representative for pre-construction coordinating entitlements and design team. Coordinated branding and negotiations with brand technical services. Developed financial proformas and budgets for purposes of financing. Negotiated management contract with Hyatt Hotels. WW Group Holdings, Inc, Liberty Harbor Development, LLC Owner s Representative - Preconstruction 100 Long Beach Hotel, Long Beach NY Owner s Representative for pre-construction coordinating entitlements and design team. Developed financial proformas and budgets for purposes of financing. Shore Development Partners LLC, c/o Douglaston Development Owner s Representative Preconstruction 100-11
Sheraton Hotel, Arlington VA Hotel Dynamics renegotiated a management contract with a third party manager when the manager failed their performance tests. HD also developed a new marketing strategy for the hotel which proved successful in attracting new business. U.S. Property Development Corporation Management Contract Renegotiation and Marketing Plan Development 416 Kempinski Hotels (Moscow) Hotel Dynamics performed a feasibility study to assist management with a proposed renovation of the historic hotel. The feasibility study helped Kempinski in negotiations with their partner, the Russian government. Hotel Development Bayonne, NJ Hotel Dynamics represented ownership in negotiating a franchise with Holiday Inns to build a hotel in Bayonne, NJ. We also assisted in design and program development working with the owner s architect. Ritz Carlton, Sharm el Shek Hotel Dynamics assisted the developer of this Ritz Carlton hotel. Ownership had to negotiate with Marriott when the owner failed to meet all brand standards with the newly built hotel. HD was responsible for project management and implementation to complete the brand requirements. Hotel Dynamics was able to successfully work with both owner and brand to Management Contractt Renegotiations Hotel Dynamics renegotiated management contracts for several properties including: o o o The University of Maryland The University of Cincinnati Turcifez Investimentos Imoturisticos, SA (Portugal) 12
As Prudential Property Group, Prudential Insurance Company Allen J. Ostroff as Managing Director 1976 1999 Hilton: Portfolio: $3.2 billion USD in equity $550 million USD dollars in debt Acquired 50% of the New York Hilton, NY, Rye Town Hilton, NY, Tarrytown Hilton, NY, Chicago Hilton and Towers, IL, Hilton Hawaiian Village, HI, Turtlebay Hilton, HI and Capital Hilton, Washington, DC, San Francisco Hilton, CA Developed the Short Hills Hilton, Short Hills, N.J. Redeveloped the Hilton, Newark, NJ, Hilton, Midland, TX Hyatt: Developed the New Orleans Hyatt, LA, Cincinnati Hyatt, OH, Nashville Hyatt, TN, Hyatt Regency Embarcadero Center, San Francisco, CA, Hyatt Regency Chicago, IL, Hyatt Regency Cambridge, MA Acquired the Grand Hyatt Hotel, Union Square, San Francisco, CA, Detroit Hyatt, Dearborn, MI Marriott Hotels: Developed the Houston Marriott, TX, Schaumberg Marriott, IL, Indianapolis Marriott, IN Acquired the Denver Marriott City Center, CO, Fort Lauderdale Marriott, FL, Lincolnshire Marriott, IL, Hunt Valley Marriott, MD Other Hotels and assets: Acquired Ritz Carlton Laguna Nigel Developed Nikko Hotel, Buckhead, Atlanta Redeveloped Sheraton, Boston, MA Acquired Holiday Inn Hotel, Mission Valley, CA Acquired Holiday Inn Hotel, Brunswick, GA Developed first 150 LaQuinta Hotels in JV partnership with Sam Barshop, Founder of LaQuinta Asset managed $1B shopping center portfolio 13
ABOUT US Allen J. Ostroff, Founder and Principal, Hotel Dynamics, LLC Allen Ostroff founded Hotel Dynamics in 1986. Since that time, the firm has been engaged in many facets of the hotel industry including due diligence, management contract negotiation, expert testimony, asset management and repositioning and ground up development. Allen has over 25 years of experience as the Managing Director of Prudential Insurance Company s Realty Group and Prudential Securities where he provided a wealth of experience in structuring acquisitions, development, and asset and financial management. During this time, he created a $3.6 billion hotel equity portfolio and a $1 billion shopping center portfolio. His expertise and successes in overseeing investments and operations in 4 5 star hotels representing 30,000 rooms and 175 restaurants adds significant management depth and focus on the core issues of control, efficiency, and value maximization. Mr. Ostroff knows the hotel business trade, having led the key due diligence process and financial structuring in over 200 acquisitions. Prior to joining Prudential, Mr. Ostroff served as the General Manager of the 2,000 plus room New York Hilton, Operations Manager at New York s famed Waldorf Astoria, and Group Vice President of Americana Hotels. Mr. Ostroff was formerly chairman of the board of Prime Hospitality Corporation, a New York Stock Exchange company and past chair of the Preston Robert Tisch Center for Hospitality, Tourism, and Travel Administration of New York University. Bruce Ostroff, Principal, Hotel Dynamics, LLC Bruce Ostroff has been with Hotel Dynamics since 2004. Mr. Ostroff has extensive experience in the financing, development and operation of hospitality projects. Bruce performs many of the asset management functions including market feasibility and underwriting. As an example, Bruce performed extensive work at the 1.3M sf New Yorker Hotel including strategic planning, analysis of operating performance, benchmarking, and development of financing strategies. He was responsible for project management and the development of financing documents as the Owner s Representative which enabled the New Yorker to obtain $65M of construction financing for the renovation of the hotel. Prior to joining the firm, Bruce worked for PriceWaterhouseCoopers in various roles with a special focus on information technology. He graduated with an Economics degree from Cornell University and holds a Masters in Business Administration from New York University. He started in the hotel real estate sector consulting and appraising properties with Hospitality Valuation Services. There he performed vital appraisals and market studies of hotel assets for acquisition, disposition and legal disputes. 14
Hotel Dynamics, LLC 175 Waverly Avenue East Rockaway, NY 11518 Office: 516.596.2342 Fax: 516.887.2394 Allen Ostroff Bruce Ostroff Cell: 516.457.5166 Cell: 917.270.5416 aostroff@hoteldy.com bostroff@hoteldy.com