loan report and application section 108 loan guarantee€¦ · value will be less than 80%, per hud...
TRANSCRIPT
Loan Report and Application $4,750,000 Section 108 Loan Guarantee
Submitted by: City of Hartford, Connecticut
To:
U.S. Department of Housing and Urban Development
July 2019
2
I. PROJECT SUMMARY The City of Hartford (City) is applying to the U.S. Department of Housing and Urban Development (HUD) for a $4,750,000 Section 108 loan. It proposed to relend the proceeds to 315 Trumbull Street Associates, LLC (315TSA), DBA Hilton Hartford, to fund necessary interior capital improvements that are required by its franchise agreement with Hilton Hotels and Resorts. 315TSA is the owner of the Hilton hotel property at 315 Trumbull Street in downtown Hartford. It is an affiliated entity of the Waterford Hotel Group, a widely experienced lodging company that owns and manages hotels throughout the country, including the Marriott in downtown Hartford. The full‐service hotel, constructed in the 1980’s, features 393 guestrooms, 15,000 square feet of state‐of‐the‐art meeting space, spa/pool/gym, and a bar and a restaurant. An agreement with the Hartford Parking Authority and Capital Regional Development Authority also provides parking options in an adjacent parking garage. 315TSA acquired the hotel in 2004, completed an extensive rehabilitation, and reopened it in 2005. The funds to acquire and renovate the hotel included over $11 million in equity and a $22 million loan from GE Business Financial Services, Inc. (GE). The capital improvements are necessary to maintain Hilton flag and franchise at the property. 139 FTE existing jobs will be retained, and the hotel will continue to be an important element of the Hartford central business district by servicing the business and leisure customer base, a large part that comes to Hartford for convention center and XL Center activities. The hotel’s centrality also gives it easy access to Xfinity Theater, restaurants, clubs, and the Dunkin Donuts Park, a recently opened minor league baseball stadium. It enjoys good vehicular accessibility given its proximity to Interstates 84, 90, and 91 as well as Route 2.
Location of Hartford Hilton
In 2010, the City of Hartford (City), and 315 Trumbull Street Associates (Owner, Operator, or Borrower) entered into a previous $7 million U.S. Department of Housing and Urban Development (HUD) Section 108 loan agreement. Proceeds of this previous Section 108 loan were used to fund a highly discounted payout on a loan from GE Business Financial Services (GE), who released the mortgage lien (over $20 million in principal, interest and fees) in exchange for the $7 million discounted payout. 315TSA also invested $4.7 million in equity in capital improvements at the time of the refinancing. While the owner has withstood several operating challenges in the last decade, it has invested nearly $4 million over the last nine years for various capital improvements, including $1 million in its food and beverage operation in the last year. The owner currently lacks necessary reserves to fund the remaining required capital improvements and furniture, fixtures, and equipment (FF&E) required by the Hilton and
3
seeks an additional $4.75 million in Section 108 long‐term debt.
Exterior view of Hartford Hilton Interior View of Hartford Hilton
While 315TSA has withstood its share of operating difficulties and market downtowns in the past, to its credit, it has demonstrated commitment by continually reinvesting in the property and remaining current on all payments under the existing Section 108 loan and land lease with the City. It expects that some of its cost cutting measures, including scaling down food and beverage operations (full service restaurant to a grab‐n‐go eatery), contracting such services such as laundry, and reducing employment levels, combined with modest increases to the average daily rate (ADR) will produce improved financial results.
While occupancy levels may slip in the period during which interior capital improvements are done, projections indicate the ability to absorb operational expenses and current and projected debt service. Ownership will also expense 4% of revenues in a “repair and replacement fund” for non‐routine maintenance and future capital improvements. The new $4.75 million loan has been structured with a five‐year interest only period to keep debt service levels manageable in the beginning years of its new collective bargaining agreement with its employees. The loan will self‐amortize from years 6 – 20.
Although the City is required to pledge its annual CDBG entitlement, it is expected that the loan will be repaid from project income. The City will also retain its first mortgage lien on the property. With the proposed new $4.75 million loan added to the current loan ($5.6 million balance), there will be $10.35 million due to the City. While the updated appraisal is not complete, it is expected that the total debt to value will be less than 80%, per HUD underwriting guidance for Section 108 loans.
II. ELIGIBLE ACTIVITY Projects funded under the Section 108 loan guarantee program must meet an eligible CDBG activity. This project is an eligible economic development activity, per 24 CFR 570.703(i). Section 108 funds will be used to fund the cost of capital improvements and FF&E replacement in the hotels’ 393 guest rooms and suites. The Section 108 guarantee fee, project soft costs and professional fees will also be funded with proceeds of loan.
4
III. NATIONAL OBJECTIVE
This project must meet one of three CDBG national objectives pursuant to 24 CFR 570.208. This project will result in “benefit to low‐ and moderate‐income persons.”
The proposed economic development project complies under the national objectives per 24 CFR 570.208(a)(4)(ii)(A) “Job Retention Activities”. This project involves an activity designed to retain permanent jobs where at least 51 percent of the jobs, computed on a full‐time equivalent basis, involve the employment of low – moderate income persons. This will be an existing job retention activity. At the time the new 108 loan is made, at least 51% of the total jobs will be held by a low‐ or moderate‐income person. New job creation is not expected immediately. 315TSA eliminated room service and the traditional restaurant operations and substituted it with a packaged pick up and delivery operation within the hotel. The effectuation of this limited service operations was agreed to by HT‐315 Trumbull Street Associates, LLC (“Employer”), and Unite HERE Local 217 (“Union”) in a Memorandum of Agreement (“Agreement”) as a supplemental agreement to the parties current Collective Bargaining Agreement (“CBA”). Without the availability of a long‐term credit facility through the Section 108 loan, the hotel will lose its Hilton designation, which could lead to the hotel’s closure, the loss of all the jobs, and a default of the existing 108 loan. To ascertain that at least 51% of the current 139 employees are low and moderate income and will be retained as a result of the new loan, the City will require the developer to collect and submit income data collection current employees prior to the proposed loan is closed and for the remaining life of the term per a Job Retention Agreement. IV. PUBLIC BENEFIT
Given that the eligible activity is economic development, the City is responsible for ensuring that at least a minimum level of public benefit is obtained from the level of expenditure of CDBG/Section 108 funds. The loan balance of the existing 108 loan is $5,600,000. Should the new 108 loan of $4,750,000 be approved, that aggregate amount of the two loans is $10,350,000. With FTE totaling 139 this equals $74,460 per one FTE job. This exceeds the $50,000 maximum per job under 24 CFR 570.209 (b)(2)(v)(e) requirements, one Full Time Equivalent (FTE) job per $50,000 in assistance. Based on census data and (American Communities Survey (ACS), the poverty rate for the census tract (5021) in which the hotel is located is more than 20%.
Existing 108 Loan Balance $5,600,000
Proposed New 108 Loan $4,750,000
Total Outstanding Balance $10,350,000
/ Number of FTE Jobs 139
= Dollar amount per one FTE $74,460
HUD Maximum Individual Job Standard $50,000
FULL TIME EQUIVALENT JOB CALCULATION
Because the public benefit standard exceeds $50,000 per job for the combined 108 loans, the City respectfully requests a waiver to this standard. Without the new 108 loan, the hotel and all the existing jobs are in danger of being lost.
5
V. SOURCES AND USES The following represents the Sources and Uses of funds. While most of the Section 108 loan will fund the necessary capital improvements in the guestrooms, bathrooms rooms and suites, the developer has already invested over $1 million in the hotel based upon the reprogramming and downsizing of a hotel, from the full‐service restaurant (Kitchen and Herbs). The developer will also pay the soft costs and professional fees, including HUD Section 108 Guarantee Fee (2.47% of loan) and closing fees.
USES OF FUNDS $ % Per Room
Herb & Kitchen Improvements $1,000,000 17% $2,545
Guestrooms $3,570,000 60% $9,084
Bathrooms $650,000 11% $6,989
8 Guest Suites $280,000 5% $956
Contingency $225,000 4% $573
Soft Costs and Professional Fees $275,000 5% $700
TOTAL $6,000,000 100% $18,301
SOURCES OF FUNDS $ %
Section 108 $4,750,000 79%
Owner Equity $1,250,000 21%
TOTAL $6,000,000 100% VI. THE BORROWER 315TSA is an affiliate of The Waterford Hotel Group, (WHG), a privately held company with thirty‐five years of experience in the hospitality development and management business. Presently, WHG has a portfolio of more than forty‐one properties with 6,229 lodging rooms. Besides the Hilton Hartford, the 409 room Marriott Hartford is also part of the WHG portfolio. The Hilton’s immediate proximity to the Convention Center and the benefit of being under the same WHG umbrella results in the Hilton being the first option for overflow guests from the Convention Center. WHG owns and operates several hotel brands, including those under the Hilton flag. Its strategy focuses on a balanced portfolio of properties ranging from major mixed‐use projects, brand developments and conversions, and the development and enhancement of small independent and boutique properties. The leadership team of WHG consists of the following individuals;
Len Wolman Forty years in the hospitality industry is Chairman and CEO of Waterford Group, LLC, a group of companies and partnerships specializing in the development, ownership, and management of hotel, venue, and gaming projects. Mark Wolman Principal and Director of the Waterford Group. Thirty years of experience in residential and commercial development and construction, asset management, hospitality development and operations.
Robert Winchester Past President of the Waterford Group. Currently Senior Advisor provides ongoing transitional support to the new president and executive leadership. Raj Dansinghani Chief Financial Officer responsible for all corporate and property level finance, debt, and audit and risk management for the organization. Key financial link between Waterford
6
Hotel Group, and the property owners, managers, controllers and accountants for its various properties.
Under the umbrella of the WHG, the Hilton Hartford has been owned and operated since 2005 by the related entities of 315TSA (the property owner and lessor) and HT‐315 Trumbull Street Associates, LCC (the hotel operator and lessee) which operates under the name Hilton Hartford Hotel. It has a hotel management agreement with WHG 315 Trumbull Management, LLC (wholly owned subsidiary of the Waterford Hotel Group, LLC. Although WHG 315 is management company and the employer of the Hilton Hartford employees, it is 315TSA (the borrower of the existing 108 loan) which is currently party to the existing 108 job retention agreement with the City of Hartford. Both 315TSA and HT‐315 Trumbull have investment partners, including Albemarle Hotel Associates LLC, and the Mystic Partners, which owns 88% of 315 Trumbull and HT‐315 Trumbull See Organizational Chart below.
Reviews of recent Dun and Bradstreet reports on the entities below found overall good credit profiles on the affiliated entities of ownership.
Payment Behavior Risk of Bad Debt Write‐off Overall Business Risk
315 Trumbull Street Associates low risk, pays on time low risk low risk
HT‐315 Trumbull Street Associates, LLCmoderate risk moderate risk moderate risk
Waterford Hotel Group, Inc.low to moderate risk. No l iens,
judgements or lawsuits
no l iens, judgements, or
lawsuits
no lawsuits. One minor
l ien.
VII. RECENT FINANCIAL PERFORMANCE AND NEAR‐TERM PROJECTIONS
7
The consolidated internally prepared balance sheet and profit and loss statement for 315TSA and HT‐315 Trumbull are found below. Of note on the balance sheet is a change from a negative net worth (equity) position in 2016 to a positive equity position in 2017. This was due to the expiration of the contingent liability and its conversion to income in 2017. This was a substantial favorable change to the balance sheet by restoring a positive net worth.
2016 2017 2018
Cash $1,455,438 $1,137,469 $682,119
Accounts Receievable $188,712 $307,787 $459,872
Other Curent Liabil ities $203,145 $172,221 $369,390
Current Liabil i l ities $1,847,295 $1,617,477 $1,511,381
Long Term Assets $9,935,094 $9,787,462 $9,402,882
Total Assets $11,782,389 $11,404,939 $10,914,263
Accounts Receivable $1,475,630 $1,760,168 $1,879,409
Accrued Liabil ities $808,019 $789,911 $692,204
Long Term Liabil ities $26,758,959 $5,761,048 $5,425,582
Total Liabil ities $29,042,608 $8,311,127 $7,997,195
Owner's Equity ($17,444,914) ($17,260,218) $3,093,812
Net Income/(Loss) $184,696 $20,354,030 ($176,744)
Total Owner's Equity ($17,260,218) $3,093,812 $2,917,068
Total Liabil ities & Equity $11,782,390 $11,404,939 $10,914,263
Debt to Equity Ratio N/A 2.69 2.74
Days Receivable 28 35 36
HARTFORD HILTON CONSOLIDATED HISTORICAL BALANCE SHEET
From an operating standpoint, the hotel has posted profitable results in the last three years, as can be seen in the recent healthy debt coverage ratios posted. While profitable, 315TSA was not able to adequately fund a repair & replacement reserve in the last three years, impacting its ability to fund the improvements needed now and required by Hilton. The challenge going forward will be to increase revenue (by modest rate increase and lower vacancy rates) and decrease expenses (subcontracting and lower F&B expenses) in order to generate sufficient net income to cover additional debt service and repair and replacement reserves. The R&R reserves will be expenses at 4% of revenue. The flexibility for structuring the 108 loan is advantageous to both the City and borrower. Debt service additions will be gradual, as the proposed new Section 108 loan will be interest only for five years. Debt coverage will be the tightest next year in 2020 when the capital improvements will be done. Ownership and management expect higher vacancy next year due to the improvement occurring throughout the year. After the improvements, it expects to pursue a more aggressive pricing structure and hopes for a lower vacancy with projected expanded programming at the XL Center and Convention Center. The 2021 year is considered the stabilization year and its NOI is used for purposes of estimating fair market value.
8
2016 2017 2018 2019 2020 Stabilized 2021
Number of keys 393 393 393 393 393 393
Rooms available 143,838 143,445 143,445 143,445 143,838 143,445
Rooms sold 89,567 89,650 96,139 96,337 97,608 97,341
Rooms occupied 90,335 90,461 96,640 96,731 98,001 97,734
Occupancy % (Sold) 62.30% 62.50% 67.02% 67.16% 67.86% 67.86%
Average Daily Rate (ADR) $163 $156 $152 $155 $155 $162
RevPAR $101 $98 $102 $104 $105 $110
Rooms Income 14,592,556$ 14,018,307$ 14,567,549$ 14,892,340$ 15,088,819$ 15,799,972$
Food and Beverage Income 3,524,580$ 3,498,631$ 3,346,723$ 2,545,721$ 2,299,185$ 2,350,226$
Other 750,248$ 714,534$ 704,475$ 688,656$ 697,651$ 713,299$
Total Income 18,867,384$ 18,231,472$ 18,618,747$ 18,126,717$ 18,085,655$ 18,863,497$
Departmental Expenses (9,412,670)$ (9,426,414)$ (9,531,965)$ (8,464,027)$ (8,290,397)$ (8,501,401)$
Undistributed Operating Expenses (6,622,122)$ (6,552,126)$ (6,478,115)$ (6,577,787)$ (6,526,189)$ (6,725,412)$
Gross Operating Profit 2,832,592$ 2,252,932$ 2,608,667$ 3,084,903$ 3,269,069$ 3,636,684$
Fixed Expenses, including RE Taxes & Lease (1,450,144)$ (1,436,469)$ (1,476,863)$ (1,824,312)$ (1,809,186)$ (1,508,277)$
EBITDA 1,382,448$ 816,463$ 1,131,804$ 1,260,591$ 1,459,883$ 2,128,407$
Repair Replacement Reserve ‐$ ‐$ ‐$ (725,069)$ (723,426)$ (754,540)$
Net Operating Income 1,382,448$ 816,463$ 1,131,804$ 535,522$ 736,457$ 1,373,867$
Existing Debt Service (534,205)$ (529,935)$ (524,545)$ (518,350)$ (511,175)$ (502,600)$
New Debt Service ‐$ ‐$ ‐$ ‐$ (190,000)$ (190,000)$
Total Debt Service (534,205)$ (529,935)$ (524,545)$ (518,350)$ (701,175)$ (692,600)$
Cash Flow 848,243$ 286,528$ 607,259$ 0 17,172$ 35,282$ 681,267$
Debt Coverage Ratio (DCR) 2.59 /1 1.54 /1 2.16 /1 1.03 /1 1.05 /1 1.98 /1
PROFIT AND LOSS STATEMENT
Historical Projected
X. OPERATING BUDGET – ABILITY TO REPAY
The primary source of repayment for the loan will be revenue derived from hotel operational revenues which are comprised of rooms, food and beverage, other operated departments, and miscellaneous income. Projected hotel revenues and expenses are calculated on a middle (base) case based on past operational performance. The borrower believes that the combination of the labor cost reductions in the food and beverage unit, together with expected increase revenue due to the upgrades to the guestrooms and suites will enable them to achieve its revenue goals, and thereby generate enough income to repay the existing and new 108 debt service and retain 139 FTE jobs over the life the loans. The borrower prepared projections that expect the Average Daily Rate‐(ADR) for 2020 to be $155 a night. The ADR generates enough revenue to support the project. Developer projected ADR and Revenue Per Available Room (RevPAR) are based upon the middle‐tier projections. The City presently has an eleven‐year Ground Lease with the hotel that expires after June 30, 2022 the borrower is current in its PILOT payments. The annual Ground Lease payment is formulaic and varies year to year. In 2018 it was $531,365. One of the largest credit risks is the $1.75 million balloon payment on the first Section 108 loan. This balloon payment occurs half way into the term of the new $4.75 million loan. The $2.2 million annual debt service payment in 2030 is a 160% increase above the $837,000 payment due in 2029. 315TSA expects to place in escrow a separate account that will be used to pay the balloon payment in 2030.
9
After the balloon payment, the debt service payments are modest and revenue projections suggest that ownership will have healthy cushions with debt coverage ratios for the balance of the loan until 2040. As another option, ownership could refinance all remaining debt in 2030 when the balloon payment is due. There would be no prepayment penalty if the entire loan balance ($4.6 million) was refinanced with another credit facility in 2030. A twenty‐year operating pro forma assembled by National Development Council on behalf of the City is included in Exhibit A. XI. CITY PLEDGE OF CDBG In the instance the project is in default and unable to repay either Section 108 loan, the debt service payments would be made by the City community development block grant (CDBG) Line of Credit. With this application, the City will complete a separate form which pledges its CDBG line of credit as a replacement source of repayment. The City has not had to use any of its CDBG for a repayment source for the existing Section 108 loan as 315TSA has been current on that loan since closing. The City’s CDBG 2019‐2020 annual allocation is $3,517,190 XII. ADDITONAL SECURITY FOR CITY Given that the CDBG program is a function of annual congressional appropriation and CDBG funds are not guaranteed to be available to the City over the term of the loan, the City must have additional security for the loan. The City will retain a first mortgage security interest in the property. Prior to the loan closing, a MAI certified appraiser will affirm the valuation for the hotel and supporting collateral. Section 108 underwriting guidance suggests for the entitlement city applicant to have a security interest in real property that demonstrates a loan to value (LTV) ratio not exceeding 80%. The City’s security interest in the real property for the combined principal balance of both 108 loans is estimated at 65% LTV based on an income based Fair Market Value (FMV) calculation. If the income approach to valuation is used and the 2021 represents the stabilized net operating income to be capitalized, the property would likely have a “as stabilized” fair market value exceeding $15 million, as evidenced with the following.
2021 As Stabil ized NOI $1,204,322
Capitalization Rate 9.00%
Valuation $13,381,361
Existing and New Loan Balance $10,350,000
Loan (Total Debt) to Value (LTV) 0.77 /$1
LOAN TO VALUE ESTIMATE
XIII. GUIDELINES FOR EVALUATING ECONOMIC DEVELOPMENT PROJECTS per 570.209(a) – HUD has developed guidelines that are designed to provide the recipient with a framework for financially underwriting and selecting CDBG‐assisted economic development projects which are financially viable and will make the most effective use of the CDBG funds, per CFR 570.209(a)
10
Below are the guidelines and the comments and findings to each of the findings:
GUIDELINES FINDINGS (1) That project costs are reasonable;
The leasehold costs are from a qualified general contractor. The FF& is based on price quotes from a supplier approved by the Hilton flag. For 393 rooms, the cost per room averages $11,450 per room.
(2) That all sources of project financing are committed;
The total project sources total $6,000,000 of which $1,250,000 is borrower equity, and $4,750,000 is the new Section 108 Loan. At least $1 million of the owner equity has already been expended on restaurant improvements.
(3) That to the extent practicable, CDBG funds are not substituted for non‐Federal financial support
Section 108 funding is required to fill the funding need. Conventional debt is not available to cover project costs due to substantial write‐off of loan and lack of consistent profitability record.
(4) That the project is financially feasible;
Yes. The projection indicates an ability to support existing and new debt service. Of challenge will be management’s ability to expense enough repair and replacement reserves to fund future capital improvements.
(5) That to the extent practicable, the return on the owner's equity investment will not be unreasonably high
Return on equity will not be unreasonably high. Owners have been investing in property continually since acquisition and returns for such investment have been below market.
(6) That to the extent practicable, CDBG funds are disbursed on a pro rata basis with other finances provided to the project.
Release of funding is contemplated as follows: Both the $4,750,000 new 108 loan and the $1,250,000 in owner equity has and will be invested pari pasu.
XIV. DEBT SCHEDULES AND PRINCIPAL REDUCTION SCHEDULES The term of the loan is 20 years. The rate is 4%. The City’s permanent rate will not be known until the public offering of the notes but is assumed that the city’s rate will be below the proposed 4% to 315TSA. The debt schedule for the new loan is structured with a five‐year interest only payment schedule. Principal and interest payments will commence in year 5 (2025) and amortize over a fifteen (15) year period
11
Year Year Payment Type Beg Balance Annual D/S Interest Principal BalanceHUD PRINCIPAL
REDUCTION SCHEDULE
1 2020 Interest Only $4,750,000 $190,000 $190,000 $0 $4,750,000
2 2021 Interest Only $4,750,000 $190,000 $190,000 $0 $4,750,000
3 2022 Interest Only $4,750,000 $190,000 $190,000 $0 $4,750,000
4 2023 Interest Only $4,750,000 $190,000 $190,000 $0 $4,750,000
5 2024 Interest Only $4,750,000 $190,000 $190,000 $0 $4,750,000
6 2025 $4,750,000 $427,220 $190,000 $237,220 $4,512,780 $240,000
7 2026 $4,512,780 $427,220 $180,511 $246,709 $4,266,071 $250,000
8 2027 $4,266,071 $427,220 $170,643 $256,577 $4,009,493 $260,000
9 2028 $4,009,493 $427,220 $160,380 $266,840 $3,742,653 $270,000
10 2029 $3,742,653 $427,220 $149,706 $277,514 $3,465,139 $280,000
11 2030 $3,465,139 $427,220 $138,606 $288,615 $3,176,524 $290,000
12 2031 $3,176,524 $427,220 $127,061 $300,159 $2,876,365 $300,000
13 2032 $2,876,365 $427,220 $115,055 $312,166 $2,564,199 $310,000
14 2033 $2,564,199 $427,220 $102,568 $324,652 $2,239,547 $320,000
15 2034 $2,239,547 $427,220 $89,582 $337,638 $1,901,909 $340,000
16 2035 $1,901,909 $427,220 $76,076 $351,144 $1,550,765 $350,000
17 2036 $1,550,765 $427,220 $62,031 $365,190 $1,185,575 $360,000
18 2037 $1,185,575 $427,220 $47,423 $379,797 $805,778 $370,000
19 2038 $805,778 $427,220 $32,231 $394,989 $410,789 $400,000
20 2039 $410,789 $427,220 $16,432 $410,789 $0 $410,000
$7,358,303 $2,608,303 $4,750,000 $4,750,000
Self‐ Amortizing
Payments over 15
years
DEBT SCHEDULE FOR NEW SECTION 108 LOAN
The previous Section 108 loan was also structured with a five‐year interest only period, 2010 – 2015. The principal reduction schedule was not based upon a straight amortization schedule. It calls for principal payments of $350,000 in years 6 – 19 (2016 – 2029) and a balloon payment of $1,750,000 in year 20 (2030). As previously covered, this balloon payment represents one of the largest credit risks as the annual debt service payment is substantially higher in this year than other years
Year Year Beg Balance Annual D/S Interest Principal Balance
1 2010 $7,000,000
9 2019 $4,750,000 $518,350 $168,350 $350,000 $4,400,000
10 2020 $5,250,000 $511,175 $161,175 $350,000 $4,900,000
11 2021 $4,900,000 $502,600 $152,600 $350,000 $4,550,000
12 2022 $4,550,000 $493,640 $143,640 $350,000 $4,200,000
13 2023 $4,200,000 $484,190 $134,190 $350,000 $3,850,000
14 2024 $3,850,000 $474,005 $124,005 $350,000 $3,500,000
15 2025 $3,500,000 $463,645 $113,645 $350,000 $3,150,000
16 2026 $3,150,000 $453,110 $103,110 $350,000 $2,800,000
17 2027 $2,800,000 $442,295 $92,295 $350,000 $2,450,000
18 2028 $2,450,000 $431,445 $81,445 $350,000 $2,100,000
19 2029 $2,100,000 $420,210 $70,210 $350,000 $1,750,000
20 2030 $1,750,000 $1,808,800 $58,800 $1,750,000 $0
DEBT SCHEDULE FOR PREVIOUS SECTION 108 LOAN
XV. ENVIRONMENTAL REVIEW Per 24 CFR 58 – See Exhibit D XVI. CITIZEN PARTICPATION
The City Council public hearing and community meeting schedule is as follows: Public Hearing and City Council Monday, July 8, 2019 Community Meetings July 17, July 18, and July 24.
12
XVII. CONTACT FOR ADDDITIONAL INFORMATION Erin Howard, AICP Director of Economic Development Department of Development Services 250 Constitution Plaza, 4th Floor City of Hartford Hartford, CT 6103 1‐860‐757‐9071 [email protected] XIX. EXHIBITS Exhibit A MAI “As Completed” Appraisal Exhibit B 108 loan Term Sheet Exhibit C Environmental Review – 24 CFR Part 58 Exhibit D Citizen’s Participation and Community Participation Exhibit E Collective Bargaining Agreement Exhibit F Agreements between City and 315 Trumbull Street Associates, LLC Exhibit G SF – 424 Application for Federal Assistance Exhibit H Lobbying Certification Statement for Loan Guarantees
EXHIBIT A: 20‐ YEAR OPERATING PRO FORMA
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Number of keys 393 393 393 393 393 393 393 393 393 393 393 393 393 393
Rooms available 143,838 143,445 143,445 143,445 143,838 143,445 143,445 143,445 143,838 143,445 143,445 143,445 143,838 143,445
Rooms sold 97,608 97,341 97,341 97,341 97,608 97,341 97,341 97,341 97,608 97,341 97,341 97,341 97,608 97,341
Rooms occupied 98,001 97,734 97,734 97,734 98,001 97,734 97,734 97,734 98,001 97,734 97,734 97,341 97,608 97,341
Occupancy % (Sold) 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86% 67.86%
Average rate $155 162.32$ 166.37$ 170.53$ 174.80$ 179.17$ 183.64$ 188.24$ 192.94$ $198 $203 $208 $213 $218
RevPAR $105 $110 $113 $116 $119 $122 $125 $128 $131 $134 $138 $141 $145 $148
Total departmental revenue $18,085,655 $18,863,497 $19,335,085 $19,818,462 $20,369,404 $20,821,771 $21,342,316 $21,875,874 $22,484,011 $22,983,340 $23,557,923 $24,146,871 $24,818,141 $25,369,306 $25,876,693 $26,394,226 $26,922,111 $27,460,553 $28,009,764 $28,569,960 $29,141,359
Total departmental expenses ($8,290,397) ($8,501,401) ($8,713,357) ($8,930,597) ($9,169,712) ($9,381,461) ($9,615,358) ($9,855,087) ($10,118,956) ($10,352,624) ($10,610,735) ($10,860,454) ($11,151,271) ($11,408,749) ($11,636,924) ($11,869,662) ($12,107,056) ($12,349,197) ($12,596,181) ($12,848,104) ($13,105,066)
Operating Profit $9,795,258 $10,362,096 $10,621,728 $10,887,865 $11,199,692 $11,440,310 $11,726,957 $12,020,786 $12,365,054 $12,630,715 $12,947,188 $13,286,417 $13,666,870 $13,960,558 $14,239,769 $14,524,564 $14,815,055 $15,111,356 $15,413,584 $15,721,855 $16,036,292
Total undistributed expenses ($6,526,189) ($6,725,412) ($6,893,360) ($7,065,503) ($7,262,601) ($7,422,823) ($7,608,191) ($7,798,191) ($8,015,691) ($8,192,532) ($8,397,129) ($8,606,836) ($8,846,896) ($9,076,501) ($9,258,031) ($9,443,191) ($9,632,055) ($9,824,696) ($10,021,190) ($10,221,614) ($10,426,046)
Gross operating profit $3,269,069 $3,636,684 $3,728,368 $3,822,362 $3,937,091 $4,017,488 $4,118,766 $4,222,596 $4,349,364 $4,438,183 $4,550,060 $4,679,581 $4,819,974 $4,884,057 $4,981,738 $5,081,373 $5,183,000 $5,286,660 $5,392,393 $5,500,241 $5,610,246
Fixed Charges ($1,809,186) ($1,508,277) ($1,542,230) ($1,777,001) ($1,614,382) ($1,649,084) ($1,686,440) ($1,724,701) ($1,965,844) ($1,804,033) ($1,845,152) ($1,887,274) ($1,932,579) ($2,182,011) ($2,225,652) ($2,270,165) ($2,315,568) ($2,361,879) ($2,409,117) ($2,457,299) ($2,506,445)
EBITDA ‐ (UNADJUSTED) $1,459,883 $2,128,407 $2,186,138 $2,045,361 $2,322,709 $2,368,404 $2,432,326 $2,497,895 $2,383,519 $2,634,150 $2,704,907 $2,792,307 $2,887,394 $2,702,045 $2,756,086 $2,811,208 $2,867,432 $2,924,781 $2,983,276 $3,042,942 $3,103,801
Replacement Reserve ($723,426) ($754,540) ($773,403) ($792,738) ($814,776) ($832,871) ($853,693) ($875,035) ($899,360) ($919,334) ($942,317) ($965,875) ($992,726) ($1,014,772) ($1,035,068) ($1,055,769) ($1,076,884) ($1,098,422) ($1,120,391) ($1,142,798) ($1,165,654)
Net operating income $736,457 $1,373,867 $1,412,735 $1,252,622 $1,507,933 $1,535,533 $1,578,634 $1,622,860 $1,484,159 $1,714,816 $1,762,590 $1,826,432 $1,894,669 $1,687,273 $1,721,018 $1,755,439 $1,790,548 $1,826,358 $1,862,886 $1,900,143 $1,938,146
Exisitng 108 Debt Service ($511,175) ($502,600) ($493,640) ($484,190) ($474,005) ($463,645) ($453,110) ($442,295) ($431,445) ($420,210) ($1,808,800) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New 108 Debt Service ($190,000) ($190,000) ($190,000) ($190,000) ($190,000) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220)
Total 108 Debt Service ($701,175) ($692,600) ($683,640) ($674,190) ($664,005) ($890,865) ($880,330) ($869,515) ($858,665) ($847,430) ($2,236,020) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220) ($427,220)
Cash Flow $35,282 $681,267 $729,095 $578,432 $843,928 $644,667 $698,303 $753,345 $625,493 $867,386 ($473,430) $1,399,212 $1,467,449 $1,260,053 $1,293,798 $1,328,219 $1,363,327 $1,399,138 $1,435,665 $1,472,923 $1,510,926
Debt Coverage Ratio 1.05 1.98 2.07 1.86 2.27 1.72 1.79 1.87 1.73 2.02 0.79 4.28 4.43 3.95 4.03 4.11 4.19 4.27 4.36 4.45 4.54
For more than 30 years, Waterford has established itself as a leading
company in the hospitality industry through steady growth and strict
adherence to industry fundamentals. Waterford keeps its owners’ and
customers’ best interests at heart. We provide value to the customer as
well as the owner, while providing career growth for associates.
This three-pronged commitment translates into business success.
w w w . w a t e r f o r d h o t e l g r o u p . c o m
EXCELLENCE IN HOSPITALITY
OPERATIONS
Waterford’s philosophy of the day-to-day running of a
hotel or convention facility is simple: “hands-on hospi-
tality”. This hospitality management style is rooted in
property-level empowerment, aided by the expert sup-
port from our corporate office in areas such as:
• Business Planning
• Brand Standards
• Budgetary Guidance
• Property Oversight
• Short and Long-term Operational Planning
HOSPITALITY MANAGEMENT
SALES & MARKETING
To outperform the competition, it takes a top-down
approach to product positioning and smart marketing.
Waterford-managed properties reach or exceed sales
goals and maintain an edge over competitors through:
• Sales and Marketing Planning
• Direct Sales
• Franchise Channels
• Market Share Focus
• Marketing and Advertising
• Public and Media Relations
• Revenue Management
• E-Commerce
HUMAN RESOURCES
Waterford understands that effective associates who
communicate well with guests and co-workers are the
most valuable assets of all. Our comprehensive human
resources department assists in developing a motivated
and productive staff through:
• Associate Recognition Program
• Recruitment and Retention
• Orientation
• Training
• Benefit Administration• Salary and Benefit Surveys• Opinion Surveys
• Career Advancement
• Internships
Waterford is one of the nation’s top hotel and
convention center management companies. The
collective expertise of our team and track record
of success has earned us the distinction as an
approved operator for the leading hotel brands.
HOSPITALITY MANAGEMENT
FINANCE
Waterford provides financial support to our properties
through a variety of accounting and finance functions
and controls. With the power of current information at the
fingertips of our executives and our strong collective back-
ground in financing, refinancing, hotel construction, and
day-to-day accounting, Waterford can apply sound fiscal
management to leverage resources and raise funds, cut
costs, grow returns, and act opportunistically during favor-
able market changes. Our financial services include:
• Centralized and Decentralized Accounting
• Internal Audit
• Cash Management
• Daily and Monthly Reporting
• Financial Reporting for Public (SEC) and Private
Companies
• Financial Analysis
• Operating Budgets
• Flexible Budgeting
• Labor Analysis
• Information Technology
• Flow-Through Analysis
• Insurance Procurement and Risk Management
Whether the involvement begins at conception or
during operation, Waterford strives for successful
performance and profitability of each managed
property, while maintaining the highest standards
of quality, service, and cleanliness.
FOOD AND BEVERAGE
Waterford’s extensive experience in food and beverage
operations comes from successfully managing numerous
outlets, including award-winning restaurants, lounges and
bars, cafes, and more than 300,000 square feet of func-
tion space. For more information, visit:
www.waterfordgrouprestaurants.com
HOSPITALITY MANAGEMENT
VENUE MANAGEMENT
In an effort to take advantage of the growing public facili-
ties management market, Waterford formed Waterford
Venue Services to manage large-scale public assembly
facilities. We provide facility management expertise in
many areas, such as:
• Operations
• Sales and Marketing
• Human Resources
• Finance and Accounting
• Technical Services
• Food and Beverage
TECHNICAL SERVICES
Waterford offers project management, value-engineering,
architectural and plan review expertise, and draws from vast
experience in a number of successfully executed develop-
ment and renovation projects. We work closely with own-
ership in determining appropriation of revenues to be set
aside for capital expenditures, with a shared goal of maxi-
mizing revenues and return on investment. Other variables,
such as life safety and ever-changing franchise require-
ments, are continually reviewed. Our services include:
• Project Budgeting
• Project Management
• Construction Management
• Design Review
• Engineering
• Capital Planning
• FF&E Procurement and Installation
Len Wolman
Chairman and CEO
Len Wolman has more than 40 years of experience in the hospitality industry. He
serves as Chairman and CEO of Waterford Group, LLC, a group of companies
and partnerships specializing in the development, ownership, and management
of hotel, venue, and gaming projects. Under his leadership, Waterford Group has
been involved in developing and operating projects totaling more than $3 billion.
Len holds a National Diploma in Hotel Management from the Hotel School of
Technikon Witwatersrand in South Africa.
Mark Wolman
Principal and Director
Mark Wolman is a Principal and Director of Waterford Group. He has more than 30
years of experience in land development, residential and commercial construction,
hospitality development and operations, as well as asset management. In his
role with Waterford, Mark has been integrally involved in the development and
supervision of projects totaling more than $3 billion.
Robert Winchester
Past President and Senior Advisor
Rob Winchester joined Waterford Hotel Group in 1990. He served in numerous
roles with the company before assuming the position of President in 2000. In
December 2017, Rob retired from his position as President and currently serves
as Past President and Senior Advisor. In his new role, Rob provides ongoing
transitional support to the newly appointed President and executive leadership.
He holds a Bachelor of Science degree in Accounting from the University of
Connecticut.
Michael Heaton
President
Since joining Waterford Hotel Group in 1997, Michael Heaton has held numerous
management positions at Waterford-managed properties before assuming the role
of Vice President, Operations in 2009. In January 2018, Michael was promoted
to the position of President for Waterford Hotel Group and is responsible for all
aspects of on-going operations for the company. Michael holds a Bachelor of Arts
degree in Economics from the State University of New York.
LEADERSHIP
Raj Dansinghani
Chief Financial OfficerRaj Dansinghani is responsible for all corporate and property level finance, debt, and audit and risk management for the organization. He serves as a key
financial link between Waterford Hotel Group, property ownership, managers, controllers, and accountants. Raj joined Waterford in 2005 as Chief Accounting
Officer for Waterford Group, working with ownership and management in multiple areas, including financing, franchising, financial reporting, compliance, audit/tax coordination, and strategic analysis. Previously, Raj worked as a
senior manager at PricewaterhouseCoopers. He holds a Bachelor of Science
degree in Accounting and Finance from Nichols College and is a Certified Public Accountant in the State of Connecticut.
Gary Avigne
Vice President, Acquisitions and Development
Gary Avigne, Vice President of Acquisitions and Development, directs and
coordinates the growth of Waterford Hotel Group. Gary works with institutional
investors, lenders, partners, and third party owners, arranging property
acquisitions, management contracts, joint venture partnerships, and selective
new development. Gary has more than 35 years of respected hotel experience
and expertise in virtually all disciplines of the industry.
Duane Schroder
Vice President, Operations
Duane Schroder is Vice President, Operations for Waterford Hotel Group and
is responsible for the oversight of the portfolio's operations. Duane joined
the organization in 2002 as part of an International Training Program with
the University of Johannesburg. He has filled many positions since that time, including Regional Hotel Director and General Manager of numerous hotels
in our portfolio. Duane received his Hospitality Degree from Witwatersrand
University.
Judith Moran
Vice President, Human Resources
Judy Moran joined Waterford Hotel Group in 2004, bringing more than 25 years
of hospitality experience to the organization. Judy’s focus at Waterford is on
employee and labor relations, executive recruitment, compensation and benefit design, performance management and organizational strategic goals. Her past
experience includes operations and human resources positions with Hyatt, Le
Meridien and Sonesta. Judy holds a Bachelor of Science degree in Psychology
from Emory University in Atlanta, Georgia.
LEADERSHIP
Karen Bachofner
Vice President, Sales and Marketing
Karen Bachofner has more than 25 years of sales experience in the hospitality
industry. She first joined Waterford Hotel Group in 1987 and has held several sales positions at Waterford-managed properties before joining the corporate
team to direct the sales, marketing and revenue management efforts of
Waterford's managed portfolio. Karen is a member of Hospitality Sales &
Marketing Association International (HSMAI) and is certified to teach Achieve Global’s Professional Selling Skills.
Lisa Beers
Vice President, Marketing and Communications
Since joining the company in 1987, Lisa has worked in various capacities
and functions, giving her a global understanding of the company’s goals and
objectives. In addition to strategic business development activities, she directs
media relations, branding, advertising, and digital marketing. Lisa holds a
Bachelor of Science degree in Business Management from the University of
Phoenix, and is a member of the Public Relations Society of America.
John DelGrosso
Vice President, Construction, Engineering and Technical Services
John DelGrosso has more than 25 years of experience in the construction
industry. His wide range of experience in construction and project management
includes numerous commercial and hotel projects, with direct oversight of more
than 20 new-build hotels and $100 million in capital projects. John attended
Mitchell College and the Hartford Graduate Center.
Michael Scott
Vice President, Information Technology
Michael Scott has been with Waterford Hotel Group for more than 15 years. He
manages brand standards, system security, and technology infrastructure with a
focus on improving workflow productivity. Michael holds a Bachelor of Science degree in Accounting from Eastern Connecticut State University.
LEADERSHIP
PROPERTY LOCATION ROOMS
ARKANSASDoubleTree by Hilton Little Rock 288
CONNECTICUTCourtyard by Marriott Cromwell 145Hilton Garden Inn Danbury 158Hilton Hartford Hartford 393Marriott Hartford Downtown Hartford 409SpringHill Suites Milford 124Residence Inn by Marriott Milford 74New Haven Village Suites New Haven 112Coutyard by Marriott Shelton 161Hyatt Place Uncasville 176 Microtel Uncasville 120Hyatt House Windsor 132Sheraton Hartford Hotel at Bradley Airport Windsor Locks 237Connecticut Convention Center Hartford ------
FLORIDAFairfield Inn & Suites Boca Raton 119Fairfield Inn & Suites Jupiter 110Courtyard by Marriott Stuart 120Ramada West Palm Beach 162
ILLINOIS
DoubleTree by Hilton Mt. Vernon 200DoubleTree by Hilton Skokie 369
MASSACHUSETTSInn on Boltwood Amherst 49 Andover Inn Andover 30Fairfield Inn & Suites Hyannis 125Courtyard by Marriott Marlborough 202Sheraton Needham 247New Bedford Harbor Hotel New Bedford 70Hyatt House Waltham 135DoubleTree by Hilton Westborough 223Williams Inn Williamstown 116
NEW YORKTownePlace Suites Albany 106Homewood Suites by Hilton Ithaca 91Courtyard by Marriott Lake Placid 96Hilton Garden Inn Riverhead 114Residence Inn by Marriott Riverhead 131
continued next page
OUR PORTFOLIO
Waterford provides value to
the customer, creates value for
the owner, and provides career
growth for associates. This three-
pronged commitment translates
into business success.
www.waterfordhotelgroup.com
914 Hartford TurnpikeP.O. Box 715
Waterford, CT 06385Phone: (860) 442-4559
Fax: (860) 437-7752
EXCELLENCE IN HOSPITALITY
PROPERTY LOCATION ROOMS
OHIOAloft Beachwood 135Westin Columbus 188Comfort Inn Piqua 101
PENNSYLVANIA
Courtyard by Marriott Coatesville 125Gettysburg Hotel Gettysburg 119
RHODE ISLANDCourtyard by Marriott Warwick 92Hyatt Place Warwick 120
TOTAL PROPERTIES LOCATIONS ROOMS
41 9 States 6,229
OUR PORTFOLIO
Waterford provides value to
the customer, creates value for
the owner, and provides career
growth for associates. This three-
pronged commitment translates
into business success.
www.waterfordhotelgroup.com
914 Hartford TurnpikeP.O. Box 715
Waterford, CT 06385Phone: (860) 442-4559
Fax: (860) 437-7752
EXCELLENCE IN HOSPITALITY
w w w . w a t e r f o r d h o t e l g r o u p . c o m
LLC
914 Hartford Turnpike · P.O. Box 715
Waterford, CT 06385
Phone: (860) 442-4559
Fax: (860) 437-7752
315 TRUMBULL STREET ASSOCIATES, LLCDBA HILTON HARTFORD
ORGANIZATIONAL CHART
Hartford MHI, LLC Mystic Hotel Investors, LLC
Mystic Partners, LLC
88%
13.87% 86.13%
Albemarle HotelAssociates, LLC
315 Trumbull StreetAssociates, LLC
(Lessor)
HT – 315 Trumbull StreetAssociates, LLC
(Lessee)
Mystic Partners, LLC
Hartford MHI, LLC
Mystic Hotel Investors, LLC
Albemarle HotelAssociates, LLC
12%
100% 12%
13.87%
86.13%
Mystic Partners Leaseco, LLC
88%