News for the Hospitality Executive
Beach, Fla. (February 9, 2011) – An affiliate of Glenmont Capital
LLC, in a joint venture with an affiliate of Peachtree Hotel Group
completed the acquisition of the 96-key Holiday Inn Daytona Beach LPGA
Boulevard in Daytona Beach, Fla. through a deed in lieu of foreclosure
agreement with the prior owner. This transaction represents the first
several planned acquisitions for the joint venture in the often
market of distressed notes secured by newly built hotel properties
secondary cities throughout the United States on a discounted basis.
“These assets often represent the newest, best quality product within their submarket and are typically already generating positive cash flow and have the potential to recover to substantially higher levels of cash flow as the market recovers,” said Joseph C. Smith, principal of Glenmont Capital Management. “Fundamentally, there is nothing wrong with these properties, but the in-place cash flow is often insufficient to cover debt service due to excessive leverage and weak market conditions. Given that the construction loans secured by these assets typically have full personal recourse guarantees, borrowers are incentivized to turn over the keys to note holders in exchange for a waiver of their personal liabilities.”
Consistent with the business plan, the venture recently acquired the newly constructed Holiday Inn Daytona Beach LPGA Boulevard following its off-market purchase of the $7.6 million non-performing first mortgage loan encumbering the asset. At approximately $47,500 per key, the venture’s acquisition price represented a 60 percent discount from the total development cost less than two years after its completion.
The Holiday Inn Daytona Beach LPGA Boulevard is a 96-room full-service hotel that opened for operation in May 2009. Located on a 3.48 acre site at the intersection of Interstate 95 and LPGA Boulevard, the property features 2,635 square feet of meeting space, 135 parking spaces, a restaurant serving three meals a day, fitness center, business center and an outdoor pool and Jacuzzi.
“Together with Peachtree Hotel Group, we were able to negotiate the highly discounted purchase price from the lender through an off-market transaction due in large part to our pre-existing relationship and Glenmont’s strong reputation within the hospitality and lending communities for closing quickly on an all-cash basis,” added Smith. “By acquiring the hotel at a discount, installing an institutional quality hotel management company to operate the property, and capitalizing on the Daytona Beach hotel market’s nascent recovery, we expect to achieve opportunistic returns despite our conservative investment approach, which did not involve the use of leverage.”
“We are pleased to close our first transaction with Glenmont Capital Management,” said Greg Friedman, chief executive officer of Peachtree Hotel Group. “The firm’s knowledge of the hotel business and ability to close quickly made this transaction possible. Given these strengths, Glenmont greatly augments my ability to grow PHG’s established platform of 16 hotels.”
The Holiday Inn is the closest hotel to the LPGA, which features two 18-hole golf courses and is the international headquarters for the LPGA, as well as the Florida headquarters for the United States Tennis Association. The Holiday Inn is also one of the closest hotels to the Florida Hospital Memorial Medical Center and is located within close proximity of the 23 miles of pristine Daytona beaches, the Ponce de Leon Inlet, as well as the Daytona Speedway and all of the attractions associated with the world famous track such as the Daytona 500 Experience and the Living Legends Museum.
About Glenmont Capital Management:
Glenmont Capital Management, LLC (Glenmont) is an institutional private equity firm headquartered in New York. The company, founded by Lawrence A. Kestin and Joseph C. Smith, invests in opportunistic real estate and real-estate related investments in the $20 million to $100 million range throughout the United States. Since its inception, Glenmont has invested in more than $1.3 billion of joint-venture transactions through its discretionary investment funds comprised of prominent institutional investors, including pension plans of Fortune 500 companies, university endowments, foundations, and high net-worth investors. In that time Glenmont has acquired or developed numerous hospitality, multi-family, office, industrial, retail, and land assets across eighteen states. For more information on Glenmont, please visit: www.glenmontcapital.com.
About Peachtree Hotel Group:
Peachtree Hotel Group invests, operates and develops premium-branded select service and extended-stay hotels under the Marriott, Starwood, Hilton and InterContinental Hotels Group flags. Since its inception, Peachtree has acquired or developed more than $135 million of hotel properties and first mortgage notes. Peachtree currently owns and/or operates 1,439 hotel guest rooms in 16 properties throughout the United States. For more information, please visit www.peachtreehotelgroup.com.
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