Prime Lodging releases Hyatt Hotels Commitment Letter of Intent

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Hyatt Key Money Commitment of $478,000 in Term Sheet

In a letter dated July 25, 2011 to Chris Verville of Prime Lodging LLC, Hyatt Place Franchising has committed to make a “key money” payment to Prime Lodging in the amount of $478,000 upon the opening of the hotel.

The letter of intent is offered through January 31, 2012 and is executable at any time after an agreement is in place between Prime Lodging and the ERC. The hotel must be opened for business by December 31, 2013 for Prime Lodging to be eligible for the key money contribution.

Kunkel Hospitality in their proposal has stated that the Hyatt “key money” will be a total of $1,000,000 and will be used as equity.

Letter_from_Hyatt_regarding_Key_Money_072511

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8 COMMENTS

  1. So let me get this straight. Kunkel’s proposal claims that they are getting $1 Million from Hyatt and that it is equity in the construction. Prime has a letter of intent stating that they have been offered $478,000 and that it comes after the hotel opens.

    Excuse me but there is no way that both of these things are true. Either Kunkel is misinformed or even telling a lie or this letter that Prime released is a fraud.

    Please try to find out which one is not telling the truth.

    • I bet you $20 that Kunkel isn’t getting any million bucks from Hyatt for equity.

      I bet you that they both will get the same deal. That letter is on Hyatt letterhead and is signed. Has Kunkel shown anything with a signature on it. I don’t even think their proposal was signed.

      • It was my understanding from reading information from Hyatt on their Hyatt Place Hotels that Hyatt will write a check for $1.M upon the successful opening of a new Hyatt Place Hotel.

        I do not see how Prime Lodging could mistake such an important point, but it appears they have.

        __

  2. Hyatt will support both groups equally…they have no reason not too…they get their brand either way. I’m sure this could all be cleared up if Kunkel posted their letter. If they have $1Million equity riding on Hyatt’s contribution they surely have it writing. If they don’t, well it’s only 33% of their developer equity…whats a million dollars amongst friends? Seriously, if the Prime Lodging letter is accurate, and it applies to both developers, shouldn’t we throw Kunkels response out for either blatently mis-representing their equity position, or at least for not knowing what the deal is with Hyatt? I mean, any way you cut it, it’s a complete whiff by the Kunkel camp.

    • You hit the nail on the head. I just cant imagine why Kunkel would out-right lie about their funding. What would they expect to happen if they win the bid and their financing isn’t there?

      I’m looking forward to their response on this issue.

      • Seemed to me to go pretty unnoticed in yesterday’s media cycle that Kunkel is reported to have 100% completed their underwriting with Acer AND that they have their design 100% complete. With regard to their underwriting, isn’t Acer a broker? I believe that they are since they are not a loan-originator…which to me means they are pursuing funding from other sources…only a underwriting approval from the funding source holds any water (at least in my not-so-humble opinion). With regard to their design being 100% complete…and this I had to go look at their proposal to find…are they saying that they have spent $1Million on design? The stated amount for A/E fees in their proposal is $1Million. Why would any developer spend that kind of money before the verdict is in as to whether or not they are selected by the City? Does this not seem fishy and completely ridiculous to anyone else? If they did indeed pursue final design documents, I hope their engineering consultants thought far enough ahead to ask for a retainer…bad business otherwise.

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