BarbriSFCourseDetails
  1. keyboard_arrow_leftBack

Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Transactions

Date & Time
  • event Date

    Wednesday, October 23, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will advise real estate counsel on the particular due diligence concerns when acquiring a hotel property. The panel will address how counsel should evaluate both physical assets as well as the operating business of the hotel. The panel will discuss best practices for assessing the findings during due diligence periods and effectively negotiating once concerns arise.

Faculty

Samantha Ahuja
Shareholder
Greenberg Traurig LLP

Ms. Ahuja focuses her practice on hotel acquisitions, operations, development and finance, hotel management agreements, licensing agreements, and commercial real estate acquisition and sale. She advises domestic and international clients on the acquisition and disposition of hotels and other commercial property, hotel management and operations, franchising, licensing and branding, restaurant management agreements, lease negotiations, and casino agreements. Ms. Ahuja regularly prepares and negotiates purchase and sale agreements, financing and development agreements, and other documents related to the acquisition, financing, development, leasing, management, and disposition of real and personal property with a focus on hotels and resorts. She also regularly works on complex transactions involving a combination of hotels, resorts, condominiums, food and beverage facilities, and other shared access amenities.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio
Joshua M. Bowman
Partner
Sherin and Lodgen LLP

Mr. Bowman brings years of experience counseling local and national real estate owners and developers, institutional and non-institutional lenders, investors, tenants, contractors, and other businesses in connection with a wide variety of transactions and situations. He has substantial experience dealing with complicated issues related to commercial real estate ownership, development, finance, joint venture arrangements, acquisitions and sales, leasing, land use, licensing, management and franchise agreements, construction agreements, and food and beverage agreements. As the Chair of the firm’s Hospitality Practice Group, Mr. Bowman has a particular concentration in representing owners and operators of restaurants and hotels. In January of 2017, Mr. Bowman joined the faculty at the Boston University School of Hospitality Administration, where he teaches two courses: The Fundamentals of a Hotel Real Estate Deal and Hospitality Law.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio

Description

When purchasing a hotel, counsel must advise clients that the due diligence must include analysis of the physical assets associated with the property (i.e., the hotel structures, parking, systems, equipment, and inventories), as well as the operating business conducted at the hotel facility and the relevant markets and environment.

When developing a proposed acquisition price, the buyer must make assumptions about future market conditions and the hotel's performance within that market. A discounted cash flow on stabilized operating projections will reflect these assumptions. Thus, a preliminary business plan must reflect assumptions as to physical facilities and condition, management, affiliation, and other factors to assess the potential acquisition realistically.

In today's market, the time allotted for due diligence, deposits going non-refundable, and closing has been significantly compressed. All sophisticated buyers know they must act quickly. Counsel should assist in coordinating the due diligence team and start the process as soon as possible. Counsel should also coordinate with clients to prioritize and push critical areas of due diligence to identify and evaluate potential deal-breakers early.

Many buyers do not focus enough on seller representations and warranties--even with significant disclaimers in the purchase agreement. Diligent preparation can flush out critical physical and operational hotel issues that only a seller or its management company would understand. Even if the seller is unwilling to make a specific representation and warranty on a particular condition, focusing on the issue upfront will help frame the buyer's post-signing due diligence.

Likewise, indemnification clauses are not a haven for buyers. The language is typically inadequate to protect a buyer from additional costs avoidable with proper due diligence. Indemnification generally applies only for breaches of representations and warranties, and if the seller limits or qualifies its representations and warranties, the indemnification provision may not be triggered.

Listen as our authoritative panel discusses the legal concerns in hotel acquisition and due diligence, conducting a proper investigation, and evaluating the data to provide the buyer with more alternatives, lower costs, and negotiating power to deal with the issues.

Outline

  1. Hotel acquisition purchase agreements
    1. Seller's representations and warranties
    2. Indemnification clauses
  2. Due diligence
    1. Timing
    2. Team
    3. Evaluation of data
  3. Best practices

Benefits

The panel will discuss these and other relevant topics:

  • How can counsel assist in coordinating a due diligence investigation for hotel acquisitions?
  • What representations and warranties must the seller include, and what should a buyer be aware of in the purchase agreement?
  • Are there opportunities to use indemnification clauses to protect hotel purchasers in the event of misrepresentation or discovery of concerns?