$58,000,000 SENIOR AND DEBT MEZZANINE FINANCING

One of the largest Cendant franchised hotel owners engaged BlueStone to secure financing for its portfolio of 2,200 hotel rooms in Orlando, FL. However, the challenges appeared insurmountable: 1) The aging properties had lost their competitive edge and slipped into bankruptcy; 2) the properties had approximately $100MM in first mortgage debt and were worth about $70MM; 3) there were significant environmental problems. The court gave BlueStone 30 days to submit a resolution plan and a commitment for funding. When the borrower engaged BlueStone, he was planning to give the properties back to the lender because no other investment bank had been able to offer a solution.
 
BlueStone recognized that this portfolio was not an asset that the lender wanted. Based on our relationship with the existing lender, BlueStone negotiated a discounted pay-off on the senior financing. This event triggered a taxable liability to the borrower that required additional capital to fund this expense. Also, the environmental problem required significant capital to correct. To solve the environmental problem and the need for additional capital to invest into the properties, BlueStone had to secure mezzanine financing for a very speculative business plan. BlueStone was able to secure market rate non-recourse senior financing and participated in the mezzanine capital tier to provide a $58,000,000 package of financing that allowed the borrower to retain 100% ownership in the properties and emerge from bankruptcy. The transaction closed in 45 days.