HomeMy WebLinkAboutTransfer of DDA CNL Hospitality Partnership to Ashford Hospitality Limited PartnershipPALM DESERT REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: CONSIDERATION OF TRANSFER OF RESIDENCE INN FROM
CNL HOSPITALITY PARTNERS LP TO ASHFORD HOSPITALITY
LIMITED PARTNERSHIP
SUBMITTED BY: DAVE YRIGOYEN, DIRECTOR OF REDEVELOPMENT/HOUSING
DATE: MAY 12, 2005
CONTENTS: ASHFORD HOSPITALITY WEBSITE INFORMATION
LETTER AGREEMENT BETWEEN CNL HOSPITALITY
PARTNERS, LP AND ASHFORD HOSPITALITY LIMITED
PARTNERSHIP
Recommendation:
By Minute Motion, that the Agency Board authorize the transfer of the
Disposition Development Agreement between the Agency and CNL
Hospitality Partnership L.P. to Ashford Hospitality Limited Partnership,
authorizing the Chairman to execute all documents necessary to approve
the transfer to Ashford Hospitality Limited Partnership.
Discussion:
The Disposition Development Agreement between the Agency and PDH Associates, the
original developer of the Residence Inn/Courtyard, provides that PDH, or its successor,
shall have the right to transfer the property to any party provided that:
Such transfer will not result in the termination of the existing hotel Franchise
Agreement with respect to the project.
2. The transferee... has the experience, quality, character, track record, financial
ability and reputation as determined by the Agency in its reasonable business
judgment to arrange and operate the project.
3. The transferee assumes in writing all obligations of the current owner as set forth
in the Agreement.
Staff Report
Transfer of Residence Inn from CNL Hospitality Partners LP to Ashford Hospitality
Limited Partnership
Page 2 of 2
May 12, 2005
Staff has reviewed the information provided for Ashford Hospitality Limited Partnership.
Essentially the company is a Real Estate Investment Trust (REIT) similar to CNL
Hospitality, the transferring owners. Ashford Hospitality Limited Partnership is a wholly -
owned company of Ashford Hospitality Trust. Ashford Hospitality has substantial
holdings in the hotel industry. Through their website at www.ahtreit.com, one can see
that their investments include Hilton, Hyatt, Marriott, Radisson and Starwood brands
throughout the United States.
Staff has reviewed the letter agreement between Ashford Hospitality and Marriott.
Marriott has agreed to the transfer of ownership from CNL Hospitality L.P. to Ashford
Hospitality Limited Partnership, and the development of a new management agreement
in substantially the same form as the previous management agreement.
Submitted by: Approval:
Dave Yrigo/edevelopment/Housing
Director of
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Approval:
Carlos (t.-
Orte
Executive Director
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In today's investment climate, hotel owners, investors, lenders and developers desire a
partner with the experience, long-term vision, flexibility and wealth of options to meet their
unique capital needs.
focused on investing in hotels at all levels of the
Ashford Hospitality Trust is the only publicly traded real estate investment trust (REIT)
capital structure and across all segments — a
one -stop shop for the lodging industry. Our diversified investment strategy offers the
benefits of direct hotel ownership, mezzanine capital, first mortgages and sale -leaseback
transactions.
Our management team is comprised of lodging and finance specialists who understand the
value and opportunity of hotel assets.
We would like to put Ashford Hospitality .Trust's capital and industry experience to work for
you.
G 2003 Ashford Hospitality Trust. All rights reserved.
Ashford Hospitality Trust, Inc. is not a chartered bank or trust company or depository institution. It is not authorized to
accept deposits or host accounts and is not licensed or regulated by any state or federal banking authority.
Hyatt e
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http://Www.ahtreit.cOm/overview.html
5/2/2005
Ashford Hospitality Trust
Page 1 of 1
10 2003 Ashford Hospitality Trust. All rights reserved.
http://www.ahtreit.com/
5/2/2005
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A\ ASHFORD
5 P I r A T Y T R U 15
PORTFOLIO
DIRECT HOTEL INVESTMENTS
* HILTON BRANDS
* HYATT BRANDS
* INTERCONTINENTAL HOTELS GROUP
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* STARWOOD BRANDS
MEZZANINE LOANS
0 HILTON BRANDS
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* STARWOOD BRANDS
FIRST MORTGAGES
0 Adam's Mark Hotel
SALE -LEASEBACKS
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ASH FORD
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CONTACT US
For Additional Information on Direct Investment, Mezzanine Capital,
First Mortgage or Sale -Leaseback Transactions:
Douglas A. Kessler
Chief Operating Officer
Ashford Hospitality Trust
14185 Dallas Parkway
Suite 1100
Dallas, TX 75254
972.778.9452
972-980.2705 (fax)
dkessler@ahtreit.com
Investor or Media Inquiries:
Tripp Sullivan
Senior Vice President & Principal
Corporate Communications, Inc.
523 Third Avenue South
Nashville, TN 37210
615.254.3376
615.254.3420 (fax)
triPP-sullivan@cci-ir.com
V 2003 Ashlbrd Hospitality Trust.
httP://Www.ahtrelt-com/contact—us.htmI
5/2/2005
AN D REWS
ATTORNEYS KU RT H LLP
April 25, 2005
VIA FACSIMILE NO. 760.341.6372 AND U.S. MAIL
Mr. Dave Yrigoyen
Palm Desert Redevelopment Agency
73-510 Fred Waring
Palm Desert, California 92260-2578
1717 Main Street, Suite 3700
Dallas, Texas 75201
214.659.4400 Phone
214.659.4401 Fax
mAe rMgth.com
214.659.4418 Direct
Re: Agreement of Purchase and Sale (the "Agreement") to be executed by and
between CNL Hospitality Partners, LP ("Seller'), and Ashford Hospitality
Limited Partnership, a Delaware limited partnership ("Buyer"), relating to the
acquisition (the "Acquisition') by Buyer of those certain parcels of land
(collectively, the "Land", together with any and all improvements thereon,
commonly known as "Courtyard by Marriott Palm Desert", 74895 Frank Sinatra
Drive, Palm Desert, California, and "Residence Inn Palm Desert", 38305 Cook
Street, Palm Desert, California (the Land, together with any and all
improvements thereon, are hereinafter collectively referred to as the "Propertv'�
Dear Mr. Yrigoyen:
The undersigned firm acts as legal counsel to Buyer in connection with the Acquisition.
Please note that Merrill Lynch Mortgage Lending, Inc. ("Lender") proposes to finance the
Acquisition pursuant to loan documentation prepared by or on behalf of Lender, such loan to
then be sold in a secondary market transaction or securitization (such loan, the mortgage of the
Property in connection therewith and the subsequent secondary market transaction are,
collectively, the "Loan Transaction").
Pursuant to Section II.G.3 of that certain Declaration of Covenants, Conditions and
Restrictions dated June 15, 1998 (the "Declaration"; Note: all capitalized terms not otherwise
defined herein shall have the respective meanings ascribed to them in the Declaration), executed
by PDH Associates LLC, a Utah limited liability company ("Prior Owner"), in favor of the City
of Palm Desert, a California municipal corporation (the "City"), and filed for record as
Instrument No. 247596, "Subject to Section II.H. below, after the issuance of a Certificate of
Occupancy for the entire Project, and the opening of the Project for business, Owner shall have
the right to Transfer the Property to any party (a "Transferee") provided that Agency gives its
approval thereto as set forth in Section 4.2.2 of the DDA which requires that:
a. such Transfer will not result in the termination of the existing Hotel
Franchise Agreement defined in the DDA;
DAL:556344.3
Austin Dallas Houston London Los Angeles New York The Woodlands Washington, DC
Mr. Dave Yrigoyen
April 25, 2005
Page 2
b. the Transferee (and/or its management company, if any) has the
experience, quality, character, trade record, financial ability and reputation, as determined by the
City in its reasonable business judgment, to manage and operate the Project; and
C. the Transferee assumes in writing all obligations of Owner set forth in the
Further, Section ILH of the Declaration states that "Owner shall have the right to
mortgage or hypothecate its interest in the Property and the Project pursuant to one or more
mortgages, deeds of trust, sales and leaseback, or any other form of encumbrance or conveyance
required for any reasonable method of financing from an institutional lender approved by the
City (which approval shall not unreasonably be withheld)[emphasis ours], for the purpose of
securing loans of funds to be used for financing the direct and indirect costs of the Project... or
for refinancing the construction financing with permanent financing."
Since the Property is subject to the Declaration, this letter has been submitted to you, on
behalf of the City and the Agency, in order to obtain from the City and/or the Agency, as
applicable, the requisite approval of (i) the Acquisition (i.e. the Transfer), (ii) Buyer, (iii) the
Loan Transaction (including, without limitation, any assignment to a securitization trustee in
connection therewith), and (iv) Lender, any securitization trustee in connection with the Loan
Transaction, and any successor, assignee or transferee of Lender or such securitization trustee,
including any purchaser of the Loan and any purchaser of the Property in a foreclosure sale or by
deed in lieu thereof (as the case may be) (such parties are, collectively, the "Lender Parties"),
described in the foregoing excerpts from the Declaration, which such approval should be granted
due to the following reasons.
First, the Acquisition (i.e. the Transfer) will not result in the termination of the existing
Hotel Franchise Agreement (as defined in the DDA); the franchisee under such Hotel Franchise
Agreement shall remain unchanged. In fact, the current management entity of the Property, a
Marriott -affiliated entity, will continue to manage the Property after the consummation of the
Acquisition. Therefore, the criteria set forth in subsections (a) and (b) cited above should be
satisfied. In order to meet the criteria set forth in subsection (c) above, at the closing of the
Acquisition, Buyer will execute the Assignment and Assumption of Disposition and
Development Agreement in the form attached hereto as Exhibit "A" and incorporated herein for
all purposes.
With regard to lender approval, please note that Lender is Merrill Lynch, an "institutional
lender", and the status as such, as well as the fact that the applicable financing represents a
standard commercial mortgage transaction from the perspective of Lender, should warrant the
reasonable approval of the City, as required.
DAL:556344.3
Mr. Dave Yrigoyen
April 25, 2005
Page 3
As such, we hereby respectfully submit this letter to the City and/or the Agency, as
applicable, for consideration of the approval of the Acquisition, Buyer, the Lender Parties and
the Loan Transaction. Due to the time sensitive nature of this matter, please let us know as soon
as reasonably possible if the City and/or the Agency will require any further documentation or
information and we will forward such to your attention immediately thereafter.
By your signature below, you consent to and approve (i) the Acquisition, (ii) Buyer as
Transferee of the Property, (iii) the Loan Transaction and (iv) the Lender Parties as mortgage
lender with respect to the Property and as transferee/owner of the Property pursuant to any future
exercise of remedies in connection with the Loan, as the case may be.
Please acknowledge your consent and approval of the foregoing by execution below.
Please return to my attention a fully -executed copy of this letter for our records.
Very truly yours,
ANDREWS KURTH LLP
By;--
Joh rucker
CONSENTED AND APPROVED:
CITY OF PALM DESERT,
a California municipal corporation
By:
Name:
Title:
Date:
PALM DESERT REDEVELOPMENT AGENCY,
An agency of the City of Palm Desert,
A California municipal corporation
By:
Name:
Title:
Date:
cc: Brigitte G. Kimichik, Esq. (Firm)
DAL:556344.3
EXHIBIT "A"
ASSIGNMENT AND ASSUMPTION
OF DISPOSITION AND DEVELOPMENT AGREEMENT
(See attached)
DAL:556344.3
ASSIGNMENT AND ASSUMPTION
OF DISPOSITION AND DEVELOPMENT AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF DISPOSITION AND DEVELOPMENT
AGREEMENT (this "Assignment") is made and entered into as of the ^day of , 2005,
by and between CNL HOSPITALITY PARTNERS, LP ("Assignor"), successor -in -interest to
PDH ASSOCIATES LLC, a Utah limited liability company ("Prior Owner"), and ASHFORD
HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited partnership, and/or its wholly -
owned designated subsidiary ("Assignee").
WITNESSETH:
WHEREAS, Assignor and Assignee are parties to that certain Agreement of Purchase and Sale
dated _, 2005 (the "Agreement"), pursuant to which Seller has agreed, among other
things, to sell, assign, transfer and convey to Assignee the Property (as defined in the
Agreement); and
WHEREAS, in connection with the sale and purchase of the Property, and as mandated by that
certain Declaration of Covenants, Conditions and Restrictions dated June 15, 1998 (the
"Declaration"), executed by Prior Owner in favor of the City of Palm Desert, a California
municipal corporation (the "City"), and filed for record as Instrument No. 247596, Official
Records, Riverside County, California, Assignor has agreed to assign to Assignee all of
Assignor's right, title and interest in and to, and Assignee has agreed to assume from Assignor
all of Assignor's obligations and liabilities under, that certain Disposition Development
Agreement dated April 29, 1998 (the "DDA"), by and between Prior Owner and the Palm Desert
Redevelopment Agency (the "Agency").
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties agree as follows:
1. Assignment. Assignor hereby assigns, transfers, and conveys to Assignee all of
Assignor's right, title and interest in and to the DDA.
2. Assumption. Assignee hereby assumes all liabilities and obligations of Assignor under
the DDA and agrees to perform all obligations of Assignor under the DDA.
3. Further Assurances. Assignor covenants with Assignee and Assignee covenants with
Assignor that each will execute or procure any additional documents necessary to establish the
rights of the other hereunder.
4. Counterparts. This Assignment may be executed by the parties in counterparts, in which
event the signature pages thereof shall be combined in order to constitute a single original
document.
DAU556425.1
5. Bindina Effect. This Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the date set forth
above.
Signed, sealed and delivered
in the presence of:
Witness Name:
Witness Name:
Witness Name:
Witness Name:
a
By:
Name:
Title:
(CORPORATE SEAL)
a
By:
Name:
Title:
(CORPORATE SEAL)
DAL:556425.1