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Success Stories

Flagg Hotel Portfolio

Submarket: Central Coast and Southern California

Product: 5 Hotels

# of Rooms: 590 Rooms

Value Created: Hotel Portfolio sold for $4 million more than the valuation prior to receivership

BACKGROUND

Trigild was appointed receiver in connection with a long-running legal dispute between members of a family trust that owned the Courtyard by Marriott in San Luis Obispo, Courtyard by Marriott and Marriott TownePlace Suites in Thousand Oaks, Best Western Valencia, and Holiday Inn Express Valencia. Trigild was directed by the Court to take over management of the assets and make recommendations on the best resolution for the trust.

The hotels were underperforming in RevPAR compared to the competition in their respective markets, and all five were past due on their franchise Property Improvement Plans (PIPs) for a combined total of $3.7 million.  The hotels were under pressure to complete the work or risk losing their brands, a loss that would greatly devalue the assets’ value. Finally, there were two years of tax issues related to the Trust.

APPROACH 

  • Upon analysis, Trigild determined that it was in the best interest of the trust estate to put the five hotels up for sale. With approval of the judge, the sale proceeded, but under the strong objection and litigation of some trust members.
  • Because trust members were divided into two groups, those opposed to the receivership and those supporting it, constant, ongoing and transparent communications were required of the receiver. The receiver put systems in place to ensure timely, objective information was available and distributed to all involved parties.
  • Trigild successfully negotiated with the franchisors to complete minor PIP items and continue operating with their current flags, with major renovation items to be addressed by new owners.

PERFORMANCE SUMMARY 

Under Trigild management, the Trust’s hotel portfolio experienced significant financial improvements in less than 12 months:

  • Room Revenue increased by 10%, ADR increased by 7%
  • RevPAR increased 10% by implementing daily strategies for capturing all market segments at the desired rate
  • GOP and NOI realized increases of 11% and 12% respectively
  • The hotels sold for a significant profit to the benefit of the trust, the portfolio valued at $4 million higher than prior to the receivership.
  • Post sale, Trigild remained as Receiver over the Trust and in control of all funds.
  • Trigild, working with the Trust and the court, successfully reached an agreement between all members of the Trust on disbursement of remaining funds and profits from the sale of the hotel portfolio.
  • Receiver successfully rectified  two years of Trust tax issues.
  • Receiver completed final accounting and disbursed all funds and control back to the Trust.