The Diplomat Resort
Hollywood, Florida

Situation

• Jones Lang LaSalle was retained by a government approved fiduciary in December 2000 to assist in the completion of the development and pre-opening activities for this deluxe mega-resort with extensive golf, marina and retail facilities in South Florida. The property includes a 1,000-room convention hotel with multiple food and beverage outlets, a 60-room luxury country club, an 18-hole golf course, a convention center, spa and tennis center.
• Originally scheduled to open in mid-2000, the much-delayed project experienced construction cost overruns and was under scrutiny from the U.S. Department of Labor.
• Independently developed, managed and without the benefit of a hotel flag, its success was being hampered by an uncertain opening date and cost and schedule overruns.

• Our development management specialists were placed on-site to immediately assess the status of the project and to develop an action plan, budget and schedule for completing the project.
• We extensively researched the contract relationships and commitments to the multiple professional and construction entities for a better understanding of the project�s situational predicament.
• We have instituted the action plan and added additional on-site personnel to support the initiative of completing the project within the current schedule.
• We reported our findings and progress three times a week to the government fiduciary.

• Permission was obtained from the U.S. Department of Labor to lift its cap on the amount of funds from the pension plan that could be allocated to The Diplomat. The removal of the cap allowed construction to be completed, thus preserving the long-term value of the asset.
• The property�s reputation with meeting planners was preserved through intensive efforts to communicate the delays and provide on-site visits to evidence the progress of the project.
• The Diplomat Hotel successfully opened January 28, 2002.

Situation

• A foreign developer, in association with a world-class hotel operator, desired to build a super-luxury hotel in a major U.S. market. When a parcel of land became available, the foreign developer quickly acquired title to the land. The hotel design was a joint effort between the hotel operator and a world-class architect.
• Jones Lang LaSalle became involved with the project approximately 18 months into construction, after the hotel had been topped out. The project was significantly over budget. The developer was not controlling the project; rather, the operator, architect and construction manager were making decisions and spending money without regard for budgetary considerations.

• We undertook a study of the entire project to assure its marketability and developed a financial model to analyze the highest return on investment. The super-luxury market niche was confirmed and the design intent remained intact.
• A recommendation was made, however, to consider two alternate luxury-class operators with North American name recognition. The owner followed this recommendation, and Jones Lang LaSalle served as the focal point for integration of the new operator into the project.
• We conducted a thorough review of all soft cost contracts, with significant focus on legal, insurance and consultants.
• An unworkable accounting system was replaced with a proactive one, which allowed the owner to anticipate financial exposure rather than react to situations as they arose. The construction manager was made accountable for costs and schedule, which prior to Jones Lang LaSalle�s involvement had not been the case.
• Jones Lang LaSalle eliminated two major impediments to teamwork between the owner and construction manager. By removing two individuals from the project and renegotiating an incentive agreement, a professional and accountable relationship was established.

• We saved approximately four months on the construction schedule and $ 30 million in project costs.
• Numerous opportunities were discovered to reduce costs and increase coverage on insurance and legal representation.
• Upon completion Jones Lang LaSalle Hotels was retained to sell the property and achieved a record price in excess of $500,000 per key.

The Residences at the
Ritz Carlton Grand Cayman
Seven Mile Beach, Grand Cayman BWI

Situation

• The Residences at the Ritz Carlton Grand Cayman is a planned luxury hotel, condominium and golf resort that includes a 300-key Ritz Carlton Resort Hotel, 71 residential condominiums and a nine hole Greg Norman signature golf course.
• The Royal Bank of Scotland LLC and Mitsui Marine International Limited (the lender) teamed up to consider funding a US$105 million loan for the development.
• The lender contacted Jones Lang LaSalle in September 2000 and proposed we provide an initial project feasibility study and subsequent due diligence services with regard to this resort development project.
• Following our initial due diligence, Jones Lang LaSalle was engaged to provide ongoing project monitoring services for the duration of the project funding.

• Jones Lang LaSalle initiated meetings with the lender and the developer in order to gain a full and complete understanding of the project and its overall feasibility from a marketing, financial and construction perspective.
• Visits were conducted to Grand Cayman in September and December of 2000 in order to survey the existing site conditions of the project and to hold subsequent meetings with the local construction community as well as with the developer.
• Early due diligence efforts included the review of all available documents regarding project budgets and schedule, environmental and geotechnical reports, governmental and zoning consents and proposed forms of contract, as well as the capabilities and relevant history of the developer.
• As part of our due diligence activities, we attended all regularly scheduled design development meetings (held in Atlanta, GA) with the design consultants and representatives of Ritz Carlton.
• In December of 2000 and again in March of 2001, interviews were conducted with three perspective contractors being considered for the building of the project.
• Jones Lang LaSalle provided a comprehensive review and comment about the proposed builder�s GMP construction contract and the project cash flows in an effort to achieve a fair and equitable contract, and in turn, help minimize the risk exposure to the developer and the lender.

• Draft and final due diligence reports were delivered to the lender for use in their final decisions required to provide an initial loan facility for the project.
• Negotiations took place with the builder in order to complete the GMP construction contract at a price commensurate with the project cash flows, as a conditions precedent to the major project funding that is under way.
• The major project funding facility is scheduled to close in early 2002. Jones Lang LaSalle has been identified to be the ongoing project monitor, responsible for the review and subsequent approval of monthly project funding draws for the lender.

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Jones Lang LaSalle�Project and Development Services Approach to Hotel Development

A successful Project & Development Services (PDS) team must provide expert management of all aspects of a project while acting in the owner�s best interests based upon clearly defined goals and objectives. Strategy, communication and experience are required to manage the design teams; to communicate on all aspects of the project; to juggle multiple financial objectives and expectations; to control phasing, budgets and schedules; and to meet unique hotel operating requirements. The primary goal is to deliver a project that fits the investor�s business plan ON TIME, ON BUDGET and WITHOUT SURPRISES.

The Jones Lang LaSalle Advantage

Jones Lang LaSalle�s Project and Development Services (PDS) brings a bottom-line business focus to our client�s project and property challenges on all project t ypes and industries. Our 400+ professionals are based throughout the United States and can implement customized and creative solutions that fit our clients' specific requirements while ensuring strategically smart solutions at the lowest cost and within the most expedient time frame. PDS services include development management, advisory, build-to-suit, interior project management, renovation & rehabilitation, move management, furniture project management, multi-site program management and strategic occupancy planning.

In addition to our expert management of the design, construction and relocation processes, we have uniquely integrated resources within Jones Lang LaSalle which can be deployed to handle any complex real estate issue, resulting in real quantifiable value�wherever our services are needed.

Jones Lang LaSalle Hotels, the world�s leading hotel investment services group, provides clients with value-added investment opportunities and advice. In 2001, its success story includes the sale of 7,972 hotel rooms to the value of US$1.3 billion in 39 cities and advisory expertise on 100,550 rooms to the value of US$26.3 billion across 255 cities.

Jones Lang LaSalle Hotels� services include transactions, mergers and acquisi tions, financial advice and capital raising, valuation and appraisal, asset management, strategic planning, operator assessment and selection and industry research.

Jones Lang LaSalle can offer a wide range of consulting, project management and development services specifically tailored to any hotel development.

Biographies of Contributors
 

Gregory Rumpel, Senior Vice President, Jones Lang LaSalle Hotels Gregory Rumpel is a Senior Vice President with Jones Lang LaSalle Hotels' Miami office where he spearheads much of the firm's hospitality investment sales, consulting and advisory assignments in the Southeastern region of the United States and Latin America. He has over 10 years of hotel operations and real estate experience throughout the Asia Pacific, US and Latin America. His advisory experience includes hotel conversion and new development feasibility analysis, hotel facilities/operations consulting and mixed use development planning.

Christian Charre, Vice President, Jones Lang LaSalle Hotels Christian Charre is Vice President of Jones Lang LaSalle Hotels� Miami office charged with expanding services of the firm in the Southeast United States, the Caribbean and Latin America. As a hotel specialist, Mr. Charre has over 20 years of hospitalit y experience and has been involved in various hotel, resort and mixed-use openings worldwide. He was recently involved with the opening of the Diplomat Hotel and Resort in Hollywood, Florida.

David A. Black, Senior Vice President, Project and Development Services, Jones Lang LaSalle David Black is a Senior Vice President of Jones Lang LaSalle and leads the hospitality practice for Project and Development Services. Mr. Black serves as a strategic adviser and project executive on a diverse group of project types. He has over 20 years of experience in the hospitality and real estate industries focusing on the development, design and construction of luxury hotels, conference centers, corporate offices and complex redevelopment projects.

©2002 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable, however no representation or warranty is made to the accuracy thereof.

Disclaimer Copyright � All material in this publication is the property of Jones Lang LaSalle Hotels (NSW) Pty. Ltd. (ABN 65 075 217 462). No part of this publication may be reproduced or copied without written permission.

The information in this publication should be regarded solely as a general guide. While care has been taken in its preparation, no representation is made nor responsibility accepted for the accuracy of the whole or any part. This publication is not part of any contract and parties seeking further details should contact the author.