PKF Launches Distressed Hotel Solutions Program (DHSP)

Services tailored for hotel lenders, owners, and attorneys,
combining research, advisory and brokerage expertise.

For Immediate Release

SAN FRANCISCO, CA, December 12, 2008 - PKF Capital today launched its Distressed Hotel Solutions Program in response to the increasing number of financially troubled U.S. Hotels, whose owners, lenders and legal representatives may be entering a crisis mode.

PKF is prepared to help hotel owners who became over-leveraged with debt during the recent easy credit years and are now faced with declining revenues and repayment due dates on the horizon.

"Our research division has recently taken the unprecedented step of issuing a mid-quarter update underscoring the speed and severity of this current decline, and it points to the timeliness and importance of this DHSP to owners and lenders," says PKF Capital’s Executive Managing Director Bob Eaton.

“Our Original forecast of RevPAR decline done in September for 2009 was –3.2%. Quickly deteriorating conditions lead us to revise the downward slide projected for 2009 to be –4.3% RevPAR decline. In December we announced our quarterly forecast for RevPAR for 2009 and the forecast is now–7.8%,” explains Eaton.

“Most hotels will weather this financial storm, but a significant number of owners and their lenders are faced with deteriorating circumstances,” he added. “PKF has always offered advisory services to help lenders and owners make the best of tough circumstances and seek solutions for those affected.” In 2008 already, PKF has been structuring creative transactions for owners of distressed lodging assets.

Owners are faced with a number of stress-inducing factors that are led by declining market fundamentals like forecasted RevPAR decreases, new restrictions on credit or mortgage debt, as well as impending loan maturities.

PKF professionals have extensive experience assisting hoteliers and owners in distressed circumstances and can assist with:

Refinancing: Limited debt is available from lenders who will consider hotel financing.
Debt restructuring: Solutions may involve a restructuring of the current debt.
De-levering: Often a new source of equity/debt is needed to both pay down an existing loan and extend a loan term or to enhance property performance through capital improvements.
Asset Sale: There will be opportunities to bring properties to market as investors begin to re-enter the market in search of the right deal.
Bankruptcy related services: PKF can provide valuable services for owners and their attorneys.

“If you are a lender who is worried about loans in your portfolio that are secured by hotels, and you don’t understand the dynamics between RevPAR, ADR and hotel franchise agreements, then you probably need to contact PKF,” says Senior Managing Director Steve Hanover. “The hotel business is very complex and you can go from bad to worse very quickly.”

PKF’s advisory teams have proven to be beneficial in working through these situations for decades, in multiple types of market conditions.

Lenders can turn to PKF for a broad spectrum of capital-related solutions.

Strategic Asset Planning: Often by thoroughly understanding the specific property and the dynamics of its market, value can be maximized by understanding timing and exit options.
Debt Restructuring: Solutions may involve restructuring the debt in order for the owner to work through market conditions and thus avoiding lender ownership of the hotel.
Management RFPs: In the event that the property’s management is not performing adequately, ownership may need new management. The process will insure the right manager will take over and at the most competitive terms.
Note Sales: There are times and individual circumstances when the solution may be to sell the note or portfolio of notes secured by hospitality properties.
Asset Sale: There will be opportunities to bring properties to market as investors begin to re-enter the market in search of the right deal.
Market Studies and Appraisals: Using current market intelligence and existing supply and demand characteristics, value can be established for ownership.
Expert Opinions: Through the experience and industry knowledge of PKF professionals, market and product assessments can be accurately provided.

Tom Callahan, PKF’s CEO, believes that “PKF has a unique position in the lodging industry, with advisory services that go back to the turn of the previous century. Today with strong capital and hotel realty groups, we have a complete service platform.”

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