Langham Hotels International, the operating and asset management arm of Hong Kong-based Great Eagle Holdings, has identified India as a strong market for development. Helmut Knipp, its senior VP (development) reveals, “Our focus has been on China of late. But India is as large and showing similar growth. The opportunity cannot be missed and we wish to take measured steps to establish the brand in India.”

According to the company, there is a strong interest to build the brands in Delhi NCR, Mumbai, Hyderabad, Bangalore, Chennai, Ahmedabad, Kochi and Goa. Knipp adds, “While on a trip to Pondicherry, I realised that the place is an ideal destination for our wish list – an undiscovered gem.”

The group is looking at management contract development in India for its two brands – The Langham (super luxury brand) and Langham Place (ideal for cities, mixed-use, or business hotels) – although it has not completely sidelined direct ownership. “In case we go for ownership, the investments will be accrued through debt and equity,” Knipp says.

According to him, there will be a focus on selecting the right partners for which he is currently speaking to developers. “We are open to partnerships with real estate developers or even Indian hotel companies for existing or greenfield properties. We will also try to facilitate funding for projects through our international networks,” Knipp elaborates.

The group aims to enter into a long-term contract of 25 years that can be renewed. Speaking about the fee structure, Knipp remarks, “We are going to be very competitive and at par with international standards. The group wants to offer value addition for the Indian developers and would expect developers to live up to the brand’s standards.

The Langham Hotels and Langham Place would have an average of 50 sq metre and 35 sq metre room sizes, respectively. While the former will be restricted to a maximum of 200 rooms, the latter would range from 100 to 400+ rooms properties depending on the plot. Raju Shahani, executive consultant with LHI, informed, “The estimated cost for the former will be approximately Rs 1.2 to 1.3 crore, while the latter would be from Rs 80 lakh to Rs one crore. These are estimated figures and would come down in case of real estate developers owing to their expertise in the field of construction.”

There is a plan to make Chuan Spa – a signature brand of LHI – a regular feature in its Indian properties. The group might add some specifically-designed spa rooms on the same floor. The group has forayed in China with a boutique hotel set to open in 2008 and recently opened a spa resort in Thailand. LHI has a development office in Bangalore at present and is looking to have its first sales office in Bangalore, Mumbai or Delhi that will help focus on India’s outbound market.

Revised-Real Estate Investment Partners

For real estate investors, having a partner can be very profitable. It really is a “legal relationship between two or maybe more persons associated by contract.” who do business jointly.

There are many uses for partnerships in real estate business. Taking on a partner not only brings more money, and makes you bolder to invest, but also splits the risks should something go wrong. It’s kind of softens the blow. It also splits the payout, but, that is fair enough, for the added benefits accrued. Possessing one set of qualifications, makes you the one to tie up with person/s having another set of qualifications in the business. If you have the money, but not the time and knowledge, there are partners/investors who have these, but not the needed money!

If you have found a suitable property that would sell well on a lease basis, but the sellers cant sell that way (they must have quick money from the sale)so you would have to shell out money or go for a mortgage for it to work for them. If you cant raise or don’t have, then partner-up with someone having the cash. Half a profit is better than nothing.

Sometimes, one may have money, but have no tome to look for or take care of a property, and yet wants to invest. Here the investor with the funds will be required to pay (with reasonable interest) or acquire the homes mortgage. Both partners square off the payment of mortgage with the rental income got from the house. If the tenant or buyer exercises his option, all gains are divided or re-invested into the company. 

Partnerships are not rigid and can work in any way, if a partner so desires.

Choose a partner well. A lot of good friends have ended over misunderstandings in business. A real friend shouldn’t be lost over money disputes. When the money is yours, you should pick someone who is aggressive, a good record keeper, worthy of trust and with experience. If the property falls to your management, then you’ll want someone who has the money, is fair, honest and willing to have confidence in you doing your part.

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Legalize all partnerships. The working of the partnership, should be understood, worded out and signed before any business transactions take effect. Scrutinize your plans together; ask what partnerships goals you want to accomplish. What if so and so goes wrong? Be prepared for all eventualities. Ensure all your solutions and options are taken care of before hand. Suppose if you must take a tenant to the law. Which partners does the representation? 

Companies with limited liabilities are good for partnerships. They have attorneys, who work out the agreement of operations. All partners should review this. When all alterations or corrections are made, then each one keeps a copy, after signing them.

Take an attorney’s advice upon going for a partnership. Lack of communication and weak paperwork is the reason why partnerships sometimes flounder. Misunderstandings eventually ruin good partnerships.

To be successful many businessmen have multiple partners. Partnerships bring together more energy and with more energy you can do more than you can do by yourself. So go ahead and enjoy all the benefits in real estate investment?

Written by: JB

Date Written: 16/07/2008

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Quality Control Completed on: 30/07/2008

LAS VEGAS—If several recent transactions are indication, at least some quick service restaurant properties are able to find capital in today’s market.

Two corporate-backed Del Taco properties in Las Vegas recently traded hands for a total of $3.75 million, or about $731 per square foot, in a recent all-cash deal. Though the properties were built in 1999 and 2001, they have newly signed long-term triple-net leases, according to Irvine, CA-based Faris Lee Investments.

Faris Lee’s Dennis Vaccaro and Matthew Mousavi represented the sellers, Innovative Property Partners LLC and Visionary Partners LLC. The buyer, an Arizona-based family trust, was represented by Marcus & Millichap Real Estate Investments Services.

“Faris Lee’s marketing strategy was to focus on the proven locations for both Del Taco properties in addition to the newly signed 20-year absolute NNN corporate-backed leases, providing an investor long-term security of income and virtually no management responsibilities,” Vaccaro says in an announcement. “Both properties also benefited from the synergy created by the strong adjacent anchor tenants at each location.” Though the buyer was not pressured by 1031 exchange deadlines, the deal closed quickly with a 20-day escrow, according to Faris Lee.

In another deal, priced at $7.3 million, Rochester, NY-based Broadstone Real Estate LLC announced that Broadstone Net Lease Inc. closed on the sale-leaseback of six properties with Sonic Corp. and affiliates. The properties are located in Oklahoma and Texas. Broadstone Net Lease is a private REIT formed in 2007 that currently owns 43 properties.

Meanwhile, in the restaurant franchisee world, Scottsdale, AZ-based GE Capital, Franchise Finance this week announced that it provided a $4-million credit facility to RDSL for the acquisition and development of seven Jack in the Box franchise restaurants in the greater Dallas market. RDSL was formed by four franchisees and, according to GE Capital, currently owns and operates 19 Jack in the Box units in Dallas and southern Oklahoma.

“I wouldn’t say that they trade easily, because they’re not very easy to finance,” Jonathan Hipp, president and chief executive officer of Reston, VA-based Calkain Cos., says of quick service restaurant properties. Still, he adds, they are trading, albeit at much higher cap rates than just a few years ago. “What was 7 before is now 8.5 to 9.5,” he adds.

What’s more, the market has seen a return of differentiation between corporate and franchisee tenants, a distinction that virtually disappeared when the market was moving fast. “There is definitely a differentiation today, but then, there are very few credit deals out there today,” Hipp says. Recent deals closed by Calkain include a franchisee Wendy’s property in Bowie, MD; in addition, Hipp reports having one four-property casual dining portfolio a few weeks away from closing and another casual dining property under letter of intent.

Without the rare credit backing of, say, a McDonald’s, the real estate, unit sales and the operator’s track record is ultimately how these properties are being valued today. “Part of it is driven by the location of the restaurant, and the sales,” says Hipp, “and then it boils down to what is the strength of the operator.”

By Michelle Napoli