lodging

Sheraton Premiere Hotel in VA Sells for $84.5 Million

by on December 17, 2010

The JBG Cos., a Chevy Chase, MD-based commercial real estate investor and developer, purchased the 443-room Sheraton Premiere Hotel at Tysons Corner in Vienna, VA, for $84.5 million in cash. A partnership between FelCor Lodging Trust (NYSE: FCH) and Starwood Hotels & Resorts Worldwide (NYSE: HOT)? sold the property for $190,745 per room. FelCor, a hotel real estate investment trust, said it received $42.25 million in gross proceeds, and there…

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Sheraton Premiere Hotel in VA Sells for $84.5 Million

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Hotel REIT To Pay $143 Million for Le Meridien San Francisco

by on December 13, 2010

Chesapeake Lodging Trust, a hotel real estate investment trust, agreed to purchase Le Meridien San Francisco, a 360-room property in San Francisco, CA, from a subsidiary of HEI Hotels and Resorts for $143 million or $397,222 per door. The deal is set…

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Hotel REIT To Pay $143 Million for Le Meridien San Francisco

December 13, 2010

Chesapeake Lodging Trust, a hotel real estate investment trust, agreed to purchase Le Meridien San Francisco, a 360-room property in San Francisco, CA, from a subsidiary of HEI Hotels and Resorts for $143 million or $397,222 per door. The deal is set…

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Fairmont Copley Plaza in Boston To Sell for $98.5M

August 3, 2010

An entity of Fairmont Hotels & Resorts agreed to sell The Fairmont Copley Plaza hotel in Boston’s Back Bay to FelCor Lodging Trust for $98.5 million, or approximately $257,180 per room. The sale is scheduled to close in the third quarter. FelCor is…

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Pace of Hotel Investment Deals Quickens

July 14, 2010

Investors are demonstrating confidence that the hotel sector is rebounding at midyear, shelling out large sums for marquee properties from Manhattan to Atlanta to San Francisco. Analysts believe the lodging market is entering one of those rare moments…

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REIT To Invest $77M in Boston Marriott Newton

July 8, 2010

Chesapeake Lodging Trust agreed to purchase the Boston Marriott Newton in Newton, MA, for $77.25 million, or about $180,000 per room. The deal is set to close by the beginning of next month. The Boston Marriott Newton is a 430-room property at 2345…

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Gulf Oil Spill: Best Chance To Stop Leak Won’t Be Ready Until August

May 31, 2010

NEW ORLEANS — The best hope for stopping the flow of oil from the blown-out well at the bottom of the Gulf of Mexico has been compared to hitting a target the size of a dinner plate with a drill more than two miles into the earth, and is anything but a sure bet on the first attempt. Bid after bid has failed to stanch what has already become the nation’s worst-ever spill, and BP PLC is readying another attempt as early as Wednesday, this one a cut-and-cap process to put a lid on the leaking wellhead so oil can be siphoned to the surface. But the best-case scenario of sealing the leak is two relief wells being drilled diagonally into the gushing well – tricky business that won’t be ready until August. “The probability of them hitting it on the very first shot is virtually nil,” said David Rensink, incoming president of the American Association of Petroleum Geologists, who spent most of his 39 years in the oil industry in offshore exploration. “If they get it on the first three or four shots they’d be very lucky.” For the bid to succeed, the bore hole must precisely intersect the damaged well. If it misses, BP will have to back up its drill, plug the hole it just created, and try again. The trial-and-error process could take weeks, but it will eventually work, scientists and BP said. Then engineers will then pump mud and cement through pipes to ultimately seal the well. As the drilling reaches deeper into the earth, the process is slowed by building pressure and the increasing distance that well casings must travel before they can be set in place. Still, the three months it could take to finish the relief wells – the first of which started May 2 – is quicker than a typical deep well, which can take four months or longer, said Tad Patzek, chair of the Petroleum and Geosystems Engineering Department at the University of Texas-Austin. BP already has a good picture of the different layers of sand and rock its drill bits will meet because of the work it did on the blown-out well. On the slim chance the relief well doesn’t work, scientists weren’t sure exactly how much – or how long – the oil would flow. The gusher would continue until the well bore hole collapsed or pressure in the reservoir dropped to a point where oil was no longer pushed to the surface, Patzek said. “I don’t admit the possibility of it not working,” he said. A third well could be drilled if the first two fail. “We don’t know how much oil is down there, and hopefully we’ll never know when the relief wells work,” BP spokesman John Curry said. The company was starting to collect and analyze data on how much oil might be in the reservoir when the rig exploded April 20, he said. BP’s uncertainty statement is reasonable, given they only had drilled one well, according to Doug Rader, an ocean scientist with the Environmental Defense Fund. Two relief wells stopped the world’s worst peacetime spill, from a Mexican rig called Ixtoc 1 that dumped 140 million gallons off the Yucatan Peninsula. That plug took nearly 10 months beginning in the summer of 1979. Drilling technology has vastly improved since then, however. So far, the Gulf oil spill has leaked between 19.7 million and 43 million gallons, according to government estimates. In the meantime, BP is turning to another risky procedure federal officials acknowledge will likely, at least temporarily, cause 20 percent more oil – at least 100,000 gallons a day – to add to the gusher. Using robot submarines, BP plans to cut away the riser pipe this week and place a cap-like containment valve over the blowout preventer. The company hopes it will capture the majority of the oil, sending it to the surface. “If you’ve got to cut that riser, that’s risky. You could take a bad situation and make it worse,” said Ed Overton, a Louisiana State University professor of environmental sciences. The latest attempt to capture the well comes after BP failed to plug the leak Saturday with its top kill, which shot mud and pieces of rubber into the well but couldn’t beat back the pressure of the oil. The location of the spill couldn’t be worse. To the south lies an essential spawning ground for imperiled Atlantic bluefin tuna and sperm whales. To the east and west, coral reefs and the coastal fisheries of Florida, Alabama, Mississippi and Texas. And to the north, Louisiana’s coastal marshes. More than 125 miles of Louisiana coastline already have been hit with oil. “It’s just killing us by degrees,” said Tulane University ecologist Tom Sherry. It’s an area that historically has been something of a superhighway for hurricanes, too. If a major storm rolls in, the relief well operations would have to be suspended and then re-started, adding more time to the process. Plugging the Ixtoc was also hampered by hurricane season, which begins Tuesday and is predicted to be very active. Three of the worst storms ever to hit the Gulf coast – Betsy in 1965, Camille in 1969 and Katrina in 2005 – all passed over the leak site. On the Gulf coast beaches, tropical weather was far from some tourists’ minds. On Biloxi beach, Paul Dawa and his friend Ezekial Momgeri sipped Coronas after a night gambling at the Hard Rock Casino. Both men, originally from Kenya, drove from Memphis, Tenn., and were chased off the beach by a storm, not oil. “We talked about it and we decided to come down and see for ourselves” whether there was oil, Momgeri said. “There’s no oil here.” Though some tar balls have been found on Mississippi and Alabama barrier islands, oil from the spill has not significantly fouled the shores. Still, the perception that it has soiled white sands and fishing areas threatens to cripple the tourist economy, said Linda Hornsby, executive director of the Mississippi Hotel and Lodging Association “It’s not here. It may never be here. It’s costing a lot of money to counter that perception,” Hornsby said. “First it was cancelations, but that evolved to a decrease in calls and there’s no way to measure that.” Yet there was fear the oil would eventually hit the other Gulf coast states. Hentzel Yucles, of Gulfport, Miss., hung out on the beach with his wife and sons. “Katrina was bad. I know this is a different type of situation, but it’s going to affect everybody,” he said. ___ Associated Press writers Kevin McGill, Ben Nuckols and Greg Bluestein in Covington, La., and Holbrook Mohr in Biloxi, Miss., contributed to this report.

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Real Money: Property Financings

May 5, 2010

Felcor Lodging Trust Inc. entered into a $212 million loan, secured by nine hotels with about 2,500 rooms, that matures in 2015. The new loan bears interest at LIBOR (subject to a 3% floor) plus 5.1%. The proceeds were used to repay $210 million in loans…

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`Blind Pools’ Lose Appeal as Ziman, Callahan Plan Real Estate IPO Comeback

February 9, 2010

By Dan Levy and Brian Louis Feb. 9 (Bloomberg) — Richard Ziman and Timothy Callahan want to raise money in the equity market after selling their real estate companies for a combined $12 billion before the property crash. Investors may balk at bankrolling their return. Ziman, former chairman of Arden Realty Inc., and Callahan, who ran Trizec Properties Inc., have each filed to offer shares in so-called blind-pool companies, which seek to raise money before owning any assets. They plan to use proceeds from the deals to acquire discounted office properties , hoping their talent and track records will lure investors. Their timing may be wrong. Recent blind-pool stock sales have been cut in size or canceled, or the shares are treading water, amid a slump in demand for initial public offerings. Meanwhile, real estate owners are trying to hold onto distressed or defaulted properties rather than unload them at fire-sale prices, leaving few buying opportunities. “Blind pools have huge negatives and only make sense if they have the perfect management and the perfect opportunity,” Mike Kirby , chairman of Newport Beach, California-based Green Street Advisors Inc., a research firm focused on real estate investment trusts, said in an interview. Almost $1 billion of commercial real estate-related IPOs registered as blind pools have been withdrawn or postponed in the past year, according to data compiled by Bloomberg. An additional $3.9 billion of deals are in the pipeline. Five of the seven blind pools that raised about $2 billion did so before October, the data show. Terreno Flops Terreno Realty Corp., a San Francisco-based fund formed to buy industrial properties, postponed a $200 million sale Jan. 25 after reducing it by a third, and cut it again yesterday by 13 percent. The company is set to price the offering today, according to Bloomberg data. Fairfield, New Jersey-based Chesapeake Lodging Trust raised 40 percent less than it sought, and the stock’s total return including reinvested dividends is down 5.5 percent after its Jan. 22 debut. Pebblebrook Hotel Trust , based in Bethesda, Maryland, is up 0.45 percent since going public Dec. 8. Blind pools are risky because “the commercial market is in abysmal shape” and investors are worried the economic recovery will sputter amid high unemployment, said Robert Edelstein , a professor specializing in real estate at the University of California at Berkeley’s Haas School of Business. The U.S. employment picture showed signs of improvement in January, with the jobless rate unexpectedly falling to 9.7 percent from 10 percent the previous month, the Commerce Department said Feb. 5. Unemployment touched a 26-year high of 10.1 percent in October. Commercial real estate transactions declined 64 percent last year to $52 billion, data from researcher Real Capital Analytics Inc. show. Distressed ‘Overhang’ Sales of commercial mortgage-backed securities, or CMBS, fell to $12.2 billion in 2009 from a record $237 billion in 2007, removing a major source of financing for building owners, according to JPMorgan Chase & Co. in New York, the second- largest U.S. bank. Delinquencies for loans packaged into CMBS rose to a record 6.5 percent in January from 1.5 percent a year earlier, Trepp LLC, a New York-based research firm, said Feb. 1. Only 14 percent of an estimated $150 billion in distressed U.S. commercial real estate has been taken back by lenders, according to Jessica Ruderman , director of research services at New York-based Real Capital. “There’s an overhang of real estate that no one is quite sure what will happen with,” Edelstein said. “The market is starting to recognize the complexities of owning troubled real estate.” Ziman and Callahan sold their companies a year before the collapse of subprime residential mortgages led to the worst financial crisis since the 1930s and a more than 40 percent decline in commercial property values from their 2007 peak. Beating REIT Index Ziman, 67, was chairman of Arden Realty when Fairfield, Connecticut-based General Electric Co. agreed to buy it for $3.2 billion in December 2005. Arden, which Ziman founded in 1990, had 116 office properties with 18.5 million square feet in Southern California. The Los Angeles-based company went public in October 1996 and returned 326 percent to shareholders, including dividends, through the announcement of the GE deal, according to a Dec. 18 IPO prospectus filed by Ziman’s new company, Halvern Realty Inc. That compares with a 237 percent return by the MSCI US REIT Index . Halvern, based in Los Angeles, is seeking to raise as much as $400 million, according to its filing with the U.S. Securities and Exchange Commission. The company intends to buy and manage Southern California office properties and will be organized as a real estate investment trust. REITs must distribute at least 90 percent of their taxable income to shareholders, and don’t pay corporate taxes on that amount. Zell’s CEO Callahan, 59, was chief executive officer of Chicago-based Trizec Properties from 2002 until it was bought for about $9 billion by New York-based Brookfield Properties Corp. and Blackstone Group LP of New York in October 2006. He was CEO of billionaire Sam Zell’s Equity Office Properties Trust, also in Chicago, from 1997 to 2002. Under Callahan, Trizec returned 189 percent, compared with a 125 percent gain by the REIT Index, according to a Dec. 11 prospectus by his new company, Callahan Capital Properties Inc. Equity Office returned 89 percent while he was in charge, twice the rate of the index. Callahan’s REIT plans to buy prime office properties initially in Boston, Los Angeles, New York, San Francisco, Seattle and Washington, according to its filing. The Chicago- based company may raise as much as $500 million in the IPO. Ziman declined to comment, citing the so-called quiet period required before an IPO. Callahan didn’t return calls seeking comment. IPO Slump The IPO market is slumping after the largest stock-market rally since the 1930s revived deals in the last four months of 2009 from a record slowdown that followed the credit crisis. This year, Boca Raton, Florida-based FriendFinder Networks Inc.’s $240 million initial offer and Los Angeles-based Imperial Capital Group Inc.’s $113 million sale were pulled; Cambridge, Massachusetts-based Ironwood Pharmaceuticals Inc. cut its share price by 30 percent; and Fort Lauderdale, Florida-based Patriot Risk Management Inc. delayed a $204 million deal. The Standard & Poor’s 500 Index has lost 5.1 percent in 2010, including dividends. U.S. IPOs will triple in 2010 to $50 billion, according to an estimate by Barclays Plc, the second-largest U.K. bank. Even with a projected rise, real estate investors may favor trusts that already own buildings rather than blind pools, said Craig Guttenplan , a New York-based REIT analyst for CreditSights Inc. “People are really wary of those,” Guttenplan said. REIT Appeal The load, or commission, for blind pools can reach 14 percent and covers underwriting and legal fees and general costs, according to Green Street Advisors’ Kirby. Terreno had a 10 percent load, one reason the IPO didn’t pass an “economic merit” test, he said. U.S. office REIT share prices are trading at 7 percent above the underlying value of their real estate and are a safer investment than blind pools, Kirby said. Blind pools face competition from other investors. Private- equity managers raised $21.4 billion for 50 North America real estate funds last year, according to data compiled by Preqin Ltd., a London-based research firm. Barry Sternlicht’s Starwood Capital Group LLC in Greenwich, Connecticut, has $900 million in a hotel fund, managing director Marc Perrin said Nov. 6 at a real estate industry meeting. Capital Raises The REIT boom that began two decades ago raised almost $27 billion in initial share sales from 1993 through 1998, according to the National Association of Real Estate Investment Trusts in Washington. More than 150 real estate companies went public in that period, and “few” of them were blind pools, said Michael Grupe , executive vice president for research. Last year, facing tight credit markets and needing to pay down debt, almost 90 existing REITs raised more than $21 billion in secondary share offerings, the most since 1997, NAREIT data show. Companies also raised more than $10 billion in unsecured debt. Still, buildings aren’t changing hands, and even established REITs can’t find deals because owners expect values to rise following the government’s massive support of capital markets, according to Dan Fasulo , managing director of Real Capital. “I don’t think we’re going to see the wave of distressed opportunities that everyone thinks is out there,” Fasulo said. “Lenders aren’t in a forced position at all. They’re not giving the good stuff away.” To contact the reporters on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net ; Brian Louis in Chicago at blouis1@bloomberg.net .

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Imperial Capital Shelves IPO, Patriot Risk Delays Offer as Slump Deepens

February 4, 2010

By Michael Tsang, Nikolaj Gammeltoft and Craig Trudell Feb. 4 (Bloomberg) — Imperial Capital Group Inc. postponed the first initial public offering by a U.S. investment bank in two years, while Patriot Risk Management Inc. delayed its share sale as the IPO market’s 2010 slump deepened. Imperial Capital, the Los Angeles-based firm that specializes in high-yield and distressed debt, shelved its $113 million sale yesterday. Patriot Risk , which underwrites workers’ compensation insurance plans, pushed back a $204 million IPO, according to Bloomberg data. A day earlier, Ironwood Pharmaceuticals Inc. cut the size of its deal by 30 percent in the biggest price reduction for a U.S. offering this year. Buyers are extracting concessions on IPOs after two of the first three deals of 2010 fell more than the Standard & Poor’s 500 Index, which slid by the most in a year in January. Imperial Capital was asking investors to pay three times the median so- called tangible book value for investment banks, while Ironwood took a 30 percent discount after trying to sell its shares at 31 percent more than what the company said was its “fair value.” “It is hard for IPOs to carve out a lot of interest in a market that’s been generally frustrating,” said Brian Barish , president of Denver-based Cambiar Investors, which oversees $5.5 billion. “As a portfolio manager, why compound your frustration with these unseasoned offerings? We’ve looked at a couple of IPOs, but we haven’t participated in any meaningful way.” Barish’s $1.07 billion Cambiar Opportunity Fund has beaten 92 percent of rival funds over the past year. 2010 Forecast While Barclays Plc of London estimates that U.S. IPOs will triple this year to $50 billion, Alpharetta, Georgia-based Cellu Tissue Holdings Inc. has lost 13 percent since selling shares at 24 percent less than the price it sought. Chesapeake Lodging Trust in Fairfield, New Jersey, has retreated 5.5 percent since its offering, and Bellevue, Washington-based Symetra Financial Corp.’s deal priced 14 percent below the highest level sought. Terreno Realty Corp. of San Francisco became the first U.S. company to shelve its IPO in 2010 last week as the S&P 500 extended its January slump to 3.7 percent, the biggest monthly drop since the gauge’s 62 percent surge began in March 2009. The biggest U.S. stock-market rally since the 1930s revived deals in the last four months of 2009, with IPOs increasing from the slowest pace on record after the failure of New York-based Lehman Brothers Holdings Inc. froze credit markets. China to Belgium Chinese companies, which accounted for six of the world’s 10 largest IPOs last year, are also accepting lower prices in 2010. China First Heavy Industries Co., a maker of equipment used in the mining and energy industries, yesterday became the first mainland company in at least a year to sell a domestic IPO at less than the highest level sought from investors. Taminco Group NV of Ghent, Belgium, the world’s largest producer of alkylamines, canceled its initial share sale yesterday because of “unfavorable” market conditions. “On the surface, it would appear the market should be working” for IPOs, said Jack Ablin , Chicago-based chief investment officer of Harris Private Bank, which oversees about $55 billion. “Looking under the hood suggests there may be more problems than people realize.” Imperial Capital had estimated in a Feb. 1 filing with the Securities and Exchange Commission that it has a net tangible book value, a measure of shareholder equity that excludes assets that can’t be sold in liquidation, of $3.41 a share. The bank would have been valued at 4.69 times its net tangible assets per share after the offering, assuming an IPO price at $16, the midpoint of the forecast range. That’s more than the median 1.52 times tangible book value of 48 investment banks and brokerages in the U.S., data compiled by Bloomberg show. Patriot Risk, Ironwood Patriot Risk had planned to sell 17 million shares at $10 to $12 each. Net premium revenue at the Fort Lauderdale, Florida-based company fell 12 percent to $28.4 million in the nine months ended Sept. 30, according to its SEC filing. At the midpoint IPO price of $11 a share, Patriot Risk’s existing shareholders stood to make an eightfold profit from the offering, based on the per-share average of $1.31 paid. Ironwood’s common stock had a “fair value” of $12.18 a share, according to models used by the Cambridge, Massachusetts- based drugmaker, its Jan. 20 SEC filing showed. That meant buyers were asked to purchase shares at a premium of 15 percent to 31 percent, Bloomberg data show. The company’s shares gained 3.6 percent to $11.65 yesterday in Nasdaq Stock Market trading. FriendFinder Networks Inc. , the publisher of Penthouse magazine, didn’t announce the pricing of its scheduled $240 million IPO yesterday. The Boca Raton, Florida-based company had planned to sell 20 million shares at $10 to $12 each after delaying its offering last week. The operator of AdultFriendFinder.com has lost money for five straight years. Marc Bell , FriendFinder’s chief executive officer, didn’t respond to e-mail and telephone messages. To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net ; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net ; Craig Trudell in New York at ctrudell1@bloomberg.net .

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Lone Star Funds to acquire Lodgian for $54 million

January 25, 2010

take over the financially struggling hotel operator and owner Lodgian for $54 million. Lodgian has had difficulty paying debt on loans backed by its hotel properties amid the lodging industry downturn, and Lodgian says the deal will give more financial

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Vranos Becomes Latest IPO Casualty as Ellington Financial Shelves Offering

December 11, 2009

By Michael Tsang Dec. 11 (Bloomberg) — Ellington Financial LLC, run by Michael Vranos’s $2.5 billion hedge-fund firm, shelved its initial public offering as investors refused to finance its plan to buy bonds backed by the type of home loans that helped spur the biggest housing bust since the Great Depression. Old Greenwich, Connecticut-based Ellington Financial and two funds controlled by Vranos pulled their $208 million sale yesterday after underwriters including Credit Suisse Group AG of Zurich and Frankfurt-based Deutsche Bank AG failed to drum up enough interest in the 7.7 million-share offering at $25 to $27 each, according to Bloomberg data and a prospectus filed with the U.S. Securities and Exchange Commission. Vranos, the former head of mortgage-securities trading at Kidder Peabody & Co., planned to use as much as 95 percent of the net proceeds to buy subprime, Alt-A, or prime loans that lack guarantees from government-supported agencies such as Fannie Mae, according to the prospectus . Prices for some securities have recovered more than 50 percent since March after the collapse of the subprime market in 2007 triggered a credit- market freeze and a 33 percent decline in home values. “The question really was, ‘what are you getting?’” said Matt Therian , a Greenwich, Connecticut-based analyst at Renaissance Capital LLC, which has specialized in IPO research since 1991. “At the end of the day, they were going to do more trading. One month, three months from now, it could be completely different from the portfolio that generated the returns in the prospectus.” Postponed IPOs Steve Bruce , a spokesman for Ellington Financial, declined to comment. Vranos’s fund followed Fairfield, New Jersey-based Chesapeake Lodging Trust in postponing its initial-share sale this week, bringing the total shelved since Oct. 29 to six. While sellers have raised more than $10 billion unloading shares since the start of September, investors have shunned the offerings of some funds established to buy real-estate assets. Ellington Financial, which returned 42 percent this year, was asking investors to pay 6.1 percent more than the value of its net assets, based on the midpoint IPO price of $26. The average fund that invests in mortgage-related securities traded at 74 cents to the dollar last week, Bloomberg data show. The fund estimated that it would have a so-called book value, or its assets minus liabilities, of $24.51 per share, after the offering and assuming an IPO price of $26, according to the filing. At that price, the shares would be 1.06 times shareholder equity, compared with the average of 0.74 times the net assets for 36 U.S. real estate investment trusts that invest in mortgages last week, data compiled by Bloomberg show. Shareholder Equity Ellington Financial had increased shareholder equity, which is the basis of performance fees paid to Vranos and his firm, by 29 percent this year through Sept. 30 on a per-share basis, the prospectus showed. That compared with the average mortgage REIT’s gain of 28 percent, Bloomberg data show. Net income from Ellington’s investments declined by 48 percent to $2.24 million last quarter from the previous year, as the fund paid out 57 percent of its interest income to Vranos’s firm in performance fees. Vranos, 48, came to Wall Street more than two decades ago after winning the 1981 teenage Mr. Connecticut title as a bodybuilder and weightlifter and graduating with a magna cum laude degree in mathematics from Cambridge, Massachusetts-based Harvard University in 1983. ‘Captain Iron’ He made Kidder one of the biggest underwriters of mortgage bonds in the early 1990s after being put in charge of the mortgage desk. The unit earned hundreds of millions of dollars under Vranos, in some years bringing in as much as half of the firm’s profit. Vranos, who earned the nickname “Captain Iron” at Harvard for the long hours he spent in the gym, once stripped to the waist and performed muscle poses to catcalls from the trading floor at Kidder, according to a Wall Street Journal story from Dec. 29, 1994. Kidder lost $40 million in the first half of 1994 due to mortgage-backed securities, according to Fairfield, Connecticut- based General Electric Co., which owned Kidder at the time. Vranos was forced to sell into a falling market after the firm said government-bond trader Joseph Jett created $350 million of phantom profits. In 1994, GE’s Chairman Jack Welch said Vranos “has done a better job than 99 percent of the managers at GE at managing a cycle.” ‘Hall of Famers’ He left Kidder in 1994 to start Ellington Management Group LLC, named after the Connecticut town where he grew up, helped by $100 million from Ziff Brothers Investments. “Mike Vranos is one of the mortgage Hall of Famers,” Steve Harris , a 22-year veteran of New York-based Goldman Sachs Group Inc.’s mortgage business who joined Garden City, New York- based Rafferty Capital Markets LLC this year to start an asset- backed trading unit, said last week. Vranos prospered until 1998, when the collapse of Greenwich, Connecticut-based Long-Term Capital Management LP contributed to an average 15 percent decline in Ellington’s funds and forced him to conduct a Columbus Day auction of $900 million in mortgage-backed securities to meet margin calls. In 2007, Ellington suspended client redemptions from its New Ellington Credit Overseas Ltd. and New Ellington Credit Partners LP funds as limited trading in securities backed by subprime loans made it too hard to value their assets. The firm last year placed hard-to-sell assets from its flagship hedge fund, Ellington Overseas Partners Ltd., into a separate fund to be sold over time, people familiar with the matter said. Credit Crisis The IPO wasn’t the first time Vranos asked investors for money for the fund. Ellington Financial was established in August 2007, the month the credit crisis began, after raising $239.7 million in a private sale to institutional buyers. From its inception through the end of last year, the fund returned 0.52 percent, before a 42 percent gain in 2009. The market for mortgage bonds without government backing was roiled from 2007 by the record number of foreclosures and declines in home prices. That led some debt to fall from 100 cents on the dollar to pennies over the next two years, as writedowns and credit losses on subprime and other debt at the world’s largest financial companies swelled to $1.7 trillion. Prices have climbed this year as investors accepted lower potential yields amid a rally across debt markets and traders anticipated demand from investment funds pairing private capital with taxpayer equity and loans. Chesapeake, Ladder Capital Investors have spurned the IPOs of other funds that have raised money to buy real-estate assets. Chesapeake Lodging , which invests in hotel properties, postponed its $250 million offering on Dec. 8, while Ladder Capital Realty Finance Inc., formed in New York to buy commercial mortgages as default rates rise, shelved its $400 million IPO in October. Leon Black’s New York-based Apollo Commercial Real Estate Finance Inc. and Colony Financial Inc. of Los Angeles cut their offerings by half in September and are trading below their listing prices. KAR Auction Services Inc., the Carmel, Indiana-based auctioneer of used automobiles controlled by private-equity funds, yesterday raised $300 million after cutting the price of its IPO to $12 a share from as much as $17. To contact the reporter on this story: Michael Tsang in New York at mtsang1@bloomberg.net .

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FelCor Completes $636 Million Senior Notes Offering and Waives Remaining Conditions to Tender Offers

October 14, 2009

FelCor Lodging Trust Incorporated and its subsidiary FelCor Lodging Limited Partnership , today announced that it completed the previously announced offering of $636 million in aggregate principal amount of FelCor LP’s senior secured notes .

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REIT eying high end hotels files for $402.5 mln IPO

October 12, 2009

travel. Hotels have had to cut rates to attract guests, leaving owners with less cash to pay off debt. In September, 5.8 percent of hotel loans backed by commercial mortgage-backed securities were in default, making the lodging sector the most distressed

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Lodging Econometrics: EMEA Hotel Construction Pipeline Continues Downswing

August 10, 2009

According to Lodging Econometrics’ latest report on Europe, the Middle East and Africa, worldwide economic turmoil, unsurprisingly, continues to squeeze the region’s hotel construction pipeline.

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Hyatt Plans $1 Billion IPO as Credit Freeze Spurs Race to Raise Capital

August 5, 2009

By Nadja Brandt Aug. 6 (Bloomberg) — Hyatt Hotels Corp., the lodging company controlled by Chicago’s Pritzker family, plans to raise up to $1.15 billion in an initial share sale to shore up its finances and fund acquisitions at a time of scarce credit. The offering may be the largest in the U.S. this year, according to data compiled by Bloomberg, and comes two years after Hyatt sold a $1 billion stake to investors including Goldman Sachs Capital Partners and Madrone Capital LLC, a firm that has been affiliated with Wal-Mart Stores Inc.

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