Abstract
Midway through construction, a hotel developer realised that costs had risen too much to be feasible for equity capital. They repositioned the asset as a ResiTel wherein each suite would be sold as a condominium unit to retail buyers. This called for setting up two separate entities: one (PropCo) for asset management and the other (LeaseCo) for operating the hotel. Unit owners would earn a regular share of hotel income. The lenders protected additional sale-risk by more conservative loan terms. The developer must analyse the feasibility of the repositioned asset.
Additional Information
| Product Type | Case |
|---|---|
| Reference No. | F&A0569 |
| Title | It’s a Residence; It’s a Hotel: It is ResiTel! |
| Pages | 12 |
| Published on | Nov 16, 2022 |
| Year of Event | 2011 |
| Authors | Das, Prashant; Gupta, Ashish; |
| Area | Finance and Accounting (F&A) |
| Discipline | Accounting, Economics, Finance |
| Sector | Banking Finance Insurance (BFI), Infrastructure |
| Learning Objective | Steps in financial feasibility analysis of a commercial real estate project Estimating sources and uses of finance Vacation/ second home markets Workings of a condominium hotel property:OpCo/PropCo breakup Possible Exit strategy for investors |
| Keywords | Hotel Development; Financial Feasibility; Real Estate Development; Leveraged Investment; Condominium Hotel; Real Estate Finance |
| Country | India |
| State | Maharashtra |
| City | Lonavala |
| Organization | Rhythm Hospitality |
| Access | For All |
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