Business & Finance

HFF Closes Sale of and Secures Financing for DoubleTree Hotel Near Los Angeles International Airport

LOS ANGELES, CA. August 16, 2017 – Holliday Fenoglio Fowler, L.P. (HFF) announced today that it has closed the sale of and secured mezzanine financing for the DoubleTree by Hilton Hotel LAX - El Segundo, a 216-room, compact, full-service hotel proximate to Los Angeles International Airport (LAX) in the Los Angeles-area community of El Segundo, California.

HFF marketed the property on behalf of the seller, a joint venture between Argosy Real Estate Partners and Evolution Hospitality. Umbrella Hotel Group purchased the hotel and was assisted in the sourcing, underwriting and loan assumption by Twenty Four Seven Hotels. Additionally, working on behalf of the new owner, HFF arranged a mezzanine loan with Washington Holdings for a term just under seven years to match the existing senior loan. HFF arranged the senior loan for the seller in a previous transaction.

The seven-story DoubleTree by Hilton Hotel LAX - El Segundo completed renovations in 2016 that consisted of a complete reconfiguration and enhancement of first-floor public areas and guestroom upgrades. As the only full-service hotel in the City of El Segundo, the property features a junior Olympic-sized, heated, outdoor pool; 3,238 square feet of indoor meeting space and 625 square feet of poolside outdoor space; new fitness center; 24-hour business center; snack shop; airport shuttle; printing service and East Grand Bar & Grille restaurant. Situated on 2.33 acres at 1985 East Grand Avenue, DoubleTree by Hilton Hotel LAX - El Segundo is located on the northwest corner of East Grand Avenue and Continental Boulevard and proximate to Los Angeles International Airport. Additionally, the hotel, which is in the South Bay office submarket, is surrounded by more than 33 million square feet of office space and is near the 105 and 405 Freeways.

The HFF investment sales team representing the seller was led by managing directors Tony Malk and Scott Hall.

The HFF debt placement team representing the borrower was led by senior managing director James Fowler.

“The process of assuming the debt and placing the new mezzanine financing created an extra layer of complication to the transaction and required a patient buyer with a long-term outlook,” Malk said. “Umbrella Hotel Group is a unique buyer in today’s hotel market and demonstrated a strong commitment to closing this transaction from the outset.”

“Since the property was encumbered with existing debt subject to heavy prepayment penalties, the right to place additional mezzanine financing gave the buyer an excellent option, which was significantly accretive to value,” Fowler said. “HFF had previously represented the seller on the senior financing and was able to negotiate the provision to allow mezzanine financing.”

About Argosy Real Estate Partners

Argosy Real Estate Partners specializes in opportunistic real estate investments. Through joint venture structures, the company partners with entrepreneurial operating partners possessing significant local market knowledge and a demonstrated track record of operating success. Over the past 25 years, Argosy Real Estate Partners has been investing capital on behalf of institutional investors, family offices and high net worth individuals. Argosy Real Estate Partners is part of the Argosy Capital fund family, which has $1 billion in assets under management. Learn more at argosyrealestate.com.

About Evolution Hospitality

Based in San Clemente, California, and launched in January of 2011, Evolution Hospitality is a relatively new hospitality management company with a long history of creating value through best-in-class hotel operations acumen. As the former management division for Tarsadia Hotels, this same team exclusively managed Tarsadia’s hotel assets, creating significant value and wealth for Tarsadia and its affiliates for three decades. Visit evolutionhospitality.com for more information.

About Umbrella Hotel Group

Umbrella Hotel Group is an investment and development company principally controlled by the Goyal family. Based in Northern California, the Goyal family office manages a diverse platform of investments, including a petroleum retail and distribution operations under license with Shell Oil and Chevron companies. Hotel assets are the primary focus of their real estate investment portfolio and the company actively seeks to acquire additional premium flagged, value-add opportunities in key markets throughout the western U.S.

About Twenty Four Seven Hotels

An entrepreneurial and spirited hospitality company, Twenty Four Seven Hotels delivers highly specialized services in hotel management, investment and development. After a decade of focusing on upscale select-service hotels, Twenty Four Seven Hotels has firmly established itself in the growing lifestyle hotel market segment with the 2016 opening of the first Moxy hotel in the United States. Concentrated in the western U.S., Twenty Four Seven Hotels continues to invest in high-caliber hospitality talent to support its growing portfolio, currently at 22 managed hotel properties with global hospitality brands including Marriott, Hilton and Hyatt. For more information on Twenty Four Seven Hotels, visit 247hotels.com. Twitter: @247hotels. Facebook: Twenty4SevenHotels.

About HFF

Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, “HFF”), HFF Securities L.P. and HFF Securities Limited (collectively, “HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 24 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment sales, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF. Holliday Fenoglio Fowler, L.P., acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number 01385740.

Coming Up In The December Online Hotel Business Review

Feature Focus
Hotel Law: Issues & Events
There is not a single area of a hotel’s operation that isn’t touched by some aspect of the law. Hotels and management companies employ an army of lawyers to advise and, if necessary, litigate issues which arise in the course of conducting their business. These lawyers typically specialize in specific areas of the law – real estate, construction, development, leasing, liability, franchising, food & beverage, human resources, environmental, insurance, taxes and more. In addition, issues and events can occur within the industry that have a major impact on the whole, and can spur further legal activity. One event which is certain to cause repercussions is Marriott International’s acquisition of Starwood Hotels and Resorts Worldwide. This newly combined company is now the largest hotel company in the world, encompassing 30 hotel brands, 5,500 hotels under management, and 1.1 million hotel rooms worldwide. In the hospitality industry, scale is particularly important – the most profitable companies are those with the most rooms in the most locations. As a result, this mega- transaction is likely to provoke an increase in Mergers & Acquisitions industry-wide. Many experts believe other larger hotel companies will now join forces with smaller operators to avoid being outpaced in the market. Companies that had not previously considered consolidation are now more likely to do so. Another legal issue facing the industry is the regulation of alternative lodging companies such as Airbnb and other firms that offer private, short-term rentals. Cities like San Francisco, Los Angeles and Santa Monica are at the forefront of efforts to legalize and control short-term rentals. However, those cities are finding it’s much easier to adopt regulations on short-term rentals than it is to actually enforce them. The December issue of Hotel Business Review will examine these and other critical issues pertaining to hotel law and how some companies are adapting to them.