Tuesday, June 16, 2009

Extended Stay’s $8B Buyout Triggers Record Bankruptcy Protection Filing

NEW YORK, NY—In April 2007, David Lichtenstein’s (top right photo) Lakewood, NJ-based Lightstone Group LLC borrowed $7.4 billion to buy the 680-hotel chain Extended Stay Inc. from New York City-based Blackstone Group LP.

Analysts at the time doubted the deal was a good one for debt-loaded Lightstone. Today they were proven right.

Lightstone filed for Chapter 11 bankruptcy court protection in the court’s Southern District in Manhattan.

Extended Stay listed $7.1 billion in assets and $7.6 billion in debts at the end of last year. The company has about 10,000 employees in 44 states and Canada.

The Wall Street Journal called it one of the largest bankruptcy filings by a U.S. commercial real-estate company.
The banking consortium that did the deal includes Bank Of America and its Merrill Lynch unit, Wells Fargo & Co.s Wachovia and Bear Stearns Cos., whose stake was taken over by the Federal Reserve after Bear collapsed in March 2008. BlackRock Inc. has been representing the Fed in the restructuring talks.

The WSJ reports the deal was highly leveraged, making Extended Stay especially vulnerable to a market downturn.

(David Lichtenstein on his boat in Manhattan, middle left photo)

The hotel chain has $4.1 billion in a senior first mortgage debt that was mostly sold to investors as commercial-mortgage-backed securities, or CMBS.

Behind those secured creditors is the $3.3 billion of mezzanine debt divided into 10 classes, ranked one through 10 in seniority.

Most of the holders of junior mezzanine debt bought at a discount, some around 60 cents on the dollar, but others as low as 10 to 15 cents, according to debt holders.

The paper reports the surprise bankruptcy filing today also triggered a new set of lawsuits.
In early June of this year, investors who bought debt that helped finance the 2007 Extended Stay deal, are suing banks that provided much of the financing.

The lawsuits accuse the banks of scheming to seize the properties and wipe out the mezzanine investors.

The hotel chain was served a notice of default in May. Both the senior and mezzanine loans matured on Friday, June 12, with extension options.
Wachovia, the servicer of the mezzanine and first mortgage debt as well as being a lender, declared a default in late May after Extended Stay failed to pay a $3.5 million late phone bill, according to the people familiar with the matter.

KFC Plans to Open 300 Outlets in China in 2009; McDonald’s About 150

DUBLIN, Ireland—Is there a Recession in China’s American-style, fast-food industry? You can’t prove it by the expansion plans of KFC and McDonald’s.

The Kentucky Colonel and the Golden Arches, long-established icons in China’s growing fast-food industry, plan to grow even more.
Research and Markets, a Dublin-based business information-gathering company, reports KFC plans to open 300 outlets in 2009; McDonald’s about 150.

KFC already has more than 2,000 stores in China; McDonald's over 1,000. The average price of a fast food item in China varies from 50 cents to $3.
“There is huge potential in the fast food industry in China,” the research group states. It is a $30 billion-a-year industry right now.
But if you are an independent entrepreneur planning to follow the big boys of the industry, do your homework carefully, advises Research and Markets.

“The fast food industry in China is imperfect in market environment, inadequate in laws and regulations, imperfect in the distribution systems, non-standard in the consumption environment and numerous in the food safety problems,” the Ireland-based company says.

“Therefore, investors should take the policies, places, the consumers’ incomes and cultural elements into consideration when investing into the fast food industry in China.
Despite the growth of American-style fast-food, the scale of Chinese-style fast food is still “all very small,” Research and Markets reports.
Still, the giant enterprises of Chinese style fast food, Kungfu Catering Management Co., Ltd. and Changzhou Lihua Fast-Food Ltd., also plan to speed up their expansions.
“As far as the fast food industry is concerned, the financial crisis turns down the costs for the labor forces and house rents in China and provides more development space,” the research group says.

“Under the circumstances of the financial crisis, many domestic and foreign enterprises are taking aim at the fast food industry in China, exclusive the possibility of new western style fast food entering China.”

Jollibee Foods Corp. for example, has already entered the Chinese market through its merger with Yonghe King.

At present, the major western style fast food brands are KFC, McDonald's and Dicos. Chinese style fast food mainly includes Lihua fast food, Kungfu, Malan noodle, Yonghe King and Daniang dumplings.

The fast food industry in China started late and only has a little more than 20 years of history.
KFC introduced American-style fast food to China in 1987, opening its first store in Beijing. Other American fast-food companies followed during the 1980s and 1990s. #

Margo Thomas of CB Richard Ellis Orlando Negotiates 10-Year Lease

ORLANDO, FL, June 16, 2009 – The Orlando office of CB Richard Ellis is pleased to announce Margo Thomas, (top right photo) Senior Retail Specialist, has negotiated a 10-year lease transaction on 13,455-sq.-ft. for the Orange County Library System.

Genny Spies and Christin Jones of The Shopping Center Group represented the landlord, Simon Property Group. The space is located in the Highland Lakes Shopping Center on West Colonial Drive in Orlando, Florida in a portion of the former Office Max.

Contact: Angelique Greven 407.839.3158 angelique.greven@cbre.com

Lawrence McCue Appointed Director of Group Sales for Westin Bonaventure, Los Angeles

LOS ANGELES, CA, June 16, 2009 – The Westin Bonaventure Hotel & Suites, (top right photo) Los Angeles announced today Lawrence McCue has been named director of group sales for the 1,354-room hotel, located in the heart of the business district in downtown Los Angeles.

“We are delighted to welcome Larry to the Westin Bonaventure,” said Managing Director Michael Czarcinski (bottom left photo).

“With 13 years of director-level sales experience, Larry will be a great asset to the Westin Bonaventure team.”

McCue most recently served as director of sales and marketing for the Keystone Resort and Conference Center in Colorado since 2004.

Prior to that, he was vice president of sales for Pinehurst Resort in North Carolina for three years.

McCue’s extensive experience also includes national sales and marketing leadership for a collection of International Conference Resorts’ properties, and as director of sales and marketing for Cheyenne Mountain Resort in Colorado Springs.
Contact: Michael Czarcinski, Managing Director, The Westin Bonaventure Hotel & Suites, Phone: (213) 624-1000 Email: michael.czarcinski@westin.com

Construct Two Group completes Lakeland, FL community center renovation

ORLANDO, FL, June 16, 2009 — Construct Two Group recently completed its $1.8 million contract to renovate and build an addition to the Coleman-Bush Building, (top left photo) a community center located on Martin Luther King, Jr. Drive in Lakeland, Fla.

Under contract with the City of Lakeland, Fla., Construct Two Group provided general contracting for site preparation, the renovation of 20,328-square-feet of existing space and a 2,420-square-foot addition.

The facility now features larger meeting and community rooms, expanded restrooms and offices for the City’s Code Enforcement and Housing units.

The project was completed in seven months.

Swilley Curtis Mundy Hannicutt Associates Architects Inc., Lakeland, Fla. designed the project.

Major subcontractors under contract with Construct Two Group were Payne Air Conditioning & Heating Inc., Lakeland; Assured Excavating, Orlando; Advantage Roofing, Orlando; A Catapano Plumbing Inc., Orlando; and Beneficial Fire Protection, Thonotosassa.

Construct Two Group provides construction management, design-build, cost management and program management services to public and private sector clients.

Having completed more than $500 million in projects since its founding in 1990, Construct Two Group is the largest African-American-owned construction management company in Florida. The Company employs a professional and support staff of 31 from offices in Orlando, Tampa and Tallahassee, Fla.

Please visit http://www.constructtwo.com/ for additional information.

Contact: Elaine Ingra, PR WORKS!, PH: 407 384-1344,

Mark One Capital Arranges $1.5M Loan for Macaroni Grill Restaurant in Florida

ALTAMONTE SPRINGS, FL – Mark One Capital has arranged a $1.5 million loan for the acquisition of a 7179-square foot Macaroni Grill Restaurant (top right photo) located at 844 W. State Road 436 in Altamonte Springs.

Geoffrey Harris, (bottom left photo) a senior director in the firm’s Phoenix office, and Farhan Kabani, an associate director in the firm’s Dallas office, arranged the financing for the property.

“Debt financing for single-tenant net-leased restaurant properties is in short supply,” says Kabani.

“However, Mark One Capital was able to source an aggressive lender that closed the transaction with excellent partial recourse loan terms.”

Financing for the Macaroni Grill Restaurant was provided by a portfolio lender at a five-year fixed rate of 6.5 percent, 25-year amortization and 50 percent recourse. The loan-to-value was 65 percent.

Press Contact: Kathy Molitor, Mark One Capital , (925) 953-1704