WORKOUTS & RESTRUCTURING SERVICES
When hotels do not perform as expected, emotions of investors, lenders, bondholders and operators are often frayed. What is needed in such circumstances are decades of experience through many downturns in the market, together with objectivity and unbiased analysis of the situation.
Berins & Co., LLC has been relied upon by the country’s largest and most active law firms and special servicers specializing in hotel workouts, restructurings and bankruptcies. During past downturns, we have been retained to advise large money center banks, CMBS lenders, regulators, and creditors committees as well as debtors-in-possession.
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Our process is very similar to that described on Strategic Planning Services – Hotel Level.
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We visit the hotel and evaluate the condition of the collateral, not so much from an engineering aspect but more from a competitive viewpoint... how does the property condition compare to competitors and how does it affect the hotel’s revenues?
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When possible, we interview the executive team at the hotel to understand the market, reasons for the hotel’s performance, and evaluate obstacles to a successful workout. We also interview competitors to gain similar insights.
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We review relevant financial data, STR reports, and any projections that have been prepared by the borrower’s team.
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We define workout options for the hotel in terms of brand, management, rate positioning, service levels and product.
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After defining assumptions under each option we prepare objective estimates of revenues and expenses.
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We do a detailed estimate of CapEx required for each of the defined options and a valuation of the collateral under each option.
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We also may suggest modifications to contractual arrangements between owners, ground lessors, operators, brands, online travel agents, space leases, technology leases and the like.
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We work closely with Counsel, Accountants, and client staff in crafting a successful resolution of the capital stack.
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When a bankruptcy is involved, assistance with preparation or review of Plans of Reorganization and monitoring of the debtor’s management is part of our work program.
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We are often called upon to provide testimony in U.S. Bankruptcy Court explaining our findings and conclusions to the Court.
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During the Great Recession of 2008-09. We were retained by special servicers on workouts of multiple full service hotels and resorts including one credit of $1.0 billion in a single portfolio. That was the sixth recession during the career of David Berins during which he led teams resolving very large hotel and resort loan portfolios for money center banks or held by quasi-government agencies after large bank and savings-and-loan failures.