LTC 191-2003 (1)

CITY OF MIAMI BEACH

m

Office of the
Letter to

Mayor David

To:

City Manager
Commission No. If/2a?
..j
Date:

Dermer and

Members of the

August

City Commission

15,

2003 From: Jorge
M.Gonzalez

City

Manager Subject: RDP ROYAL

RDP Royal
PALM D Attached please find correspondence from Union Planters notifying
Palm Hotel Limited Partnership that their loan has matured and is in default.Additionally,
attached you will find a response to said notice from RDP Royal Palm
Hotel, LP.The letter from Union Planters indicates the loan
attorney'
2003 and remains unpaid, plus default interest and unpaid
7,

Palm' s
to
August

matured July
s

fees.Royal

response indicates they continue

pay debt service.Additionally, I have attached the most recent
291.
, 52 for the
$
2003 in the amount of 41

rental payment for

negotiating session
additional rent,plus sales tax.A follow- up
In
Peeblehs as been scheduled on September 4,
2003 regarding the LO!.
with Don

monthly base and
the

meantime, I will

provide

you

any updated informationas

lcmgrl$

with
it

is

5Mc\ rar F:
received. JMG\<

ALLIL TC- 03IRDP Royal

Palm DefauIlNotice.

r

I

J

UNION
PLANTERS
BANK

August

8,
2003 Via Certified

Mail-Return

Receipt Requested & U.

S.
Mail RDP Royal Palm
Limited Partnership

Hotel
P ADC
Hospitality Corporation 1

c/o

550 Biltmore Way,
Suite

970 Coral Gables, Florida
33134

Attn.:R.
Donahue Peebles, President
to RDP Royal Palm

Re:

Planters Bank, N.A.the
("Bank")loan

Union

Hotel

Limited

Partnership,

a

Florida

limited
Borrower") ( the " Loan")Gentlemen: This letter is to
partnership ( the "

you

advise

that the

Loan

matured

on July 7,2003,but remains
unpaid and,therefore, is in default since

July

7,

2003.
The amount owing to the

Bank

is

as

follows:Principal

Default

Interest
from and

after

July 7,

2003 to August 8,2003

Unpaid Attorneys'

Fees

Total: 53,824, 999.

99

After August
Per Diem @18%

8,

50 In the
2003 861, 200.00 6,250. 00 54,692, 449.99 26,912.
to
payable
all
sums
to
collect
event of error, the Bank reserves

it under the Loan

Documents. Acceptance of

partial

Bank at
18, 2003 at the
Unless payment in cleared funds is received by August
no alternative
have
m.
will
p.
2:
00
by
33134
2800 Ponce de Leon
Miami, Florida
Boulevard,
full
in
but to forward this matter to our attorneys. Please make arrangements for payment

of the Loan by that
Loan of

date.

By copy

of this letter, we hereby advise the guarantors of the

such default and

demand for payment.Very
truly yours, i~

y "' j;1anis Senior Vice
President

R. Donahue
ra:::-

Peebles, Guarantor HCF Group,

Joy Venero. Ocean Bank
Miami Beach Redevelopment Agency, Executive Director
Miami Beach Redevelopment Agency, General Counsel
City of Miami Beach, City Manager
Inc,Guarantor

of
Miami Beach,City Attorney

City

Minsker
Bloom &

Six

Hoffman, Esq.2800

Continents Hotels, LLC Stuart
Ponce

de

305H2,

1 FAX
0,

14:

2003

O!)'/ lJ/

1345 PEEBLES ATLANTIC DEVELOP III
002/005 RDP
ROYAL PALM HOTEL,
LP

550

Billmore
Way, Suite
Gables.

Florida

970 Coral

33134 Tel: (

305)442-4341
442Fax: 305)
(
4345 August 12.2003
Via Facsimile &US
Mail Mr. Roy

D.Tanis Senior Vice President Union Planters Bank 2800 Ponce de Leon Boulevard Coral Gables, Florida 33134
Dear Mr.Tanis: We are in receipt of your letter dated August a,which arrived in our
offices today. The action that you have taken by issuing a default notice
relative to our mortgage loan
and unjustified. It is

on

the Royal Palm Hotel is

unreasonable

be.
has compfetely ignored the circumstances surrounding this
whatever its motives may
and
the
loan.
At
risk
11
project
of stating the obvious, the 9/
the
attacks
had
devast
a
t
i
n
g
a
on
the
tourism
hospitality
and
they
have yet to
terrorist
effect
industries, and
apparent that Union Planters,

fully recover. Miami Beach was partjcularly hard
hit. Then, as things started to come back, our country went
to war in Iraq and the tourism industrial was hit again. As a
we have had to endure an economic recession that caused
result of this,
nearly every major airline to

proceed to bankruptcy filings despite massive

subsidies.

actions have also had
a direct
Royal
The
Palm
Hotel
opened
in
industry.
May of 2002,eight months after the attacks. It opened despite enormous challenges
that we
not only faced, but overcame relative to environ- mental problems. structural
in
the
original Royal Palm Hotel
defects

impact

on

the

government

travel

and

These

tourism

structure and

disputes with contractors. During the construction period, as it was extended due to these
problems, we continued to pay debt service.The Hotel opened at the
commencement of the slowest portion of
the year for tourism on Miami Beach.
Once
we experienced

opened,

Town
s

significant and

substantial problems with the Hotel
Crowne
"
Plaza"). You are fully familiar

Park" d/
b/a

bookings were well below the

operator,

Town Park Hotel Corporation ("

with those

problems. The

Hotel'

1.

08/

1 FAX
15
PEEBLES

20.03 U: 0.

3/

305H2. 13.

ATLANTIC DE\ tLOP 003/ 005 Mr.Roy D.Tanis August 12,2003 Page 2 Rather
our power to
than shy away from dealing with these issues, we have done everything in
make this Hotel a success despite the challenges that we faced.As
a result, Crowne Plaza has removed and replaced substantially all of its management person el such
that the Hotel has finally begun to meet and exceed Crowne Plaza'
s
forecasted numbers. We have pursued
remedies against the general contractor to enforce our
rights in relation to construction problems. We have been in continuous negotiation with

the

ground

lessor relative

to

our

claims

against the ground

lessor

including,

other things, a claim under an environmental indemnity contained in the ground lease.Through all of this
and despite all of this, we have paid Union Planters
its debt service and the Hotel is and
its payments. Not only that, this Hotel is far from being
has been current on
loan to value ratio
The
a distressed property",
"

among

for this loan

Million ($20, 000,
000)
pay

debt

service.

property is

and

approximately

sixty- five percent (65%)
with approximately Twenty

Dollars of cash

We are maintaining a

equity in the property. And, we continue to
reserve account with your institution, in cash, in

an amount sufficient to cover four ( 4)
months' of debt service payments. And, we continue
to pay debt service. The only reason that we are even dealing with and discussing
these issues is because
Crowne Plaza failed to achieve a modest debt service
ratio
during
the
coverage
height of the last tourist season. The Hotel, had
Crowne Plaza achieved said debt service coverage, would have been
an automatic extension

of

granted

the loan. The catastrophic effect

management

of

on tourism

by the

terrorist attacks

and problems

with

the Hotel by Crowne Plaza

combined to such an
continued

to

extent that the required coverage
was not achieved. But,we
pay debt service.
We have entered into a series

of letter agreements providing
for short extensions and which contemplate extensions
2006 provided that acceptable levels of debt service coverage are achieved. We strongly
believe

to

February,

that those levels

can now be achieved in view of the manner in which the
currentl
y being managed. We have been negotiating with Town Park
is
Hotel
over the
last several weeks to finalize an agreement that will be acceptable to Union Planters whereby Town
Park will provide the guaranty performance of the Hotel that you require in order for
the

to

be

was

the

loan

extended. We
result

understand

that

your

requirement

for

Town

Park' s

guarantee

the Bank' s loss of confidence in Town Park'
s ability to accurately forecast its future performance or its ability to
achieve operating results
with
such
projections.
In
view
of
the
of
cash
col
l
a
t
e
ral
consistent
amount
the
account that is already

being

of

maintained as

security for the

loan,

the net amount that you are seeking to be guarantied by Town Park is
approximately Seven Hundred One Thousand ($ 701, 000) Dollars. We have provided financial statements
to you from Town Park which evidence (and you have confirmed) that Town ParI<
has
a net worth of Fifty Seven Million ($
57, 000, 000)Dollars. This net worth
is
very

08!~

3/

305~

2n03 1~:
05

FAX

42~3~ 5

PEEBLES
ATLANTIC
DEVELOP OOV005 Mr. Roy D.Tanis
you have rejected Town Park as

unreasonable and
worth

unjustified in view of the

2003 Page 3 Nevertheless,
a guarantor under these circumstances. That rejection is clearly
net
August 12,

the proposed guarantor and the

of

amount to be guarantied. And we continue
to pay debt service. Despite Town
Park' s Fifty Seven Million ($
000,
57, 000) Dollars net worth,you are
insisting that its parent, Intercontinental Hotels,
guaranty
the amount. We have
explained to you that Intercontinental will not give any guaranties. We have
been attempting during the last week to schedule a call between you
and a
senior offrcer of Intercontinental Haters in London. but we have been unsuccessful due to
your being
unavailable. We finally
were able to schedule a call for tomorrow, but you have
now canceled it.
You stated last week that such a call

would

not be productive and that you were not going to
change your position. We are not asking
for a reduction in the loan amount.
are
not
asking
for deferral or abatement of
We
any payments. What we are
asking for is for
Planters to act

Union

reasona-bly under the circumstances and : 0 act responsibly as an important member
of
this community which is so dependent
on tourism. We are asking that Union Planters
comply with our last letter agreement and accept as
security for Seven
One
Thousand
701. 000) Dollars the guaranty
Hundred
of Town Park, a significant
hotel

operator and owner having a net worth of Fifty Seven Million ($
57,000, 000)
Dollars. We are
only si)(
( away from the commencement of the
6)weeks
part
of
the
year
busy
that
will minimize any risk that the Sank will have and minimize the chances
of
ever having
to draw on the guaranty.Based

Crowne Plaza to

exceed

its

forecast

upon

current bookings, we expect

and budget for October. We ask

that

you
reconsider the position that you
taken. And,while you are doing
have

so,
debt service
will continue
to

be paid.Sincerely,
RDP ROYAL PALM

HOTEL. LP By:PADC Hospitality
General Partner
Corporation r,
Richard A.
Matlof Vice President cc:
R.
Donahue Peebles HCF Group, Inc.

2. 0'
1'
3/

08,'

FAX

305-1-

12.13.

15
PEEBLES

Royal

LOP

ATLANTIC DE'~

Hotel,

Palm

14l00l/005 RDP

LP FAX To:Munay

Dubin

From:

Richard

Fax:305-

A.Matlof

El7~
7782

Date:

08113103

cc:Re:o

Pages:5, including this CoverSheet

03101:

03

S/

2.

13/

003

H:03

FAX 305H2. 1J.

lS PEEBLES ATLANTIC DEYELOP 002/005 RDP
ROY
550

AL PALM

HOT' EL,LP
Biltmore

Way,
Suite 970

Coral Gables,

Florida 33134 Tel: ( 305)
442-4342 Fax: (
305)442-4345
August 12, 2003 Via
Facsimile &US Mail

Mr.Roy D.
Senior Vice President Union Planters Bank 2800 Ponce
de Leon Boulevard Coral Gables. Florida 33134
Dear Mr.Tanis: We are in receipt of your letter dated August 8,which arrived in our
offices today. The action that you have taken by issuing a default notice
relative to our mortgage loan on the Royal Palm Hotel is unreasonable

Tanis

and

unjustified. It is

apparent that Union Planters,

whatever

its motives may

and the loan. At

project
terrorist attacks had a

be,
has completely

the risk of

stating

the

ignored

the

circumstances

surrounding

this

the 9/
11
industries, and they have yet to

obvious,

effect on the hospitality and tourism
particularly hard
hit. Then, as things started to come back, our country went
to war in Iraq and the tourism industrial was hit again. As a
we have had to endure an economic recession that caused
result of this,
nearly every major airline to
fully recover. Miami Beach

devastating

was

to bankruptcy filings despite massive government subsidies.
These actions have also had a direct
on
travel
and
tourism
impact
the
industry. The Royal Palm Hotel opened in
May of 2002.eight months after the attacks. It opened despite enormous challenges
that we
not only faced, but overcame relative to environ- mental problems. structural
defects in the original Royal Palm Hotel
proceed

structure and disputes with contractors. During the construction period, as it was extended due to these
problems, we continued to pay debt service. The Hotel opened at the
commencement of the slowest portion of
the year for tourism on Miami Beach.
Once
opened. we experienced significant and substantial
problems with the Hotel operator, Town Park Hotel Corporation ("
Town Park" d/
b/a Crowne
"
s

bookings were well below the

Plaza"). You

are

fully

familiar with those

problems. The

Hotel'

03
1:
1-

13/2003

08/

05H2-

FAX ;)

13- lS PEEBLES ATLANTIC

DE'~
LOP

Page 2 Rather than shy away
003/00S Mr. Roy D.Tanis August 12,2003
make this Hotel
we have done everything in our power to
from dealing with these Issues,
a
AS
faced.
result,Crowne
a success despite the challenges that we
that the Hotel
such
personnel
management
Plaza has removed and replaced substantially all of its
forecasted numbers. We
s
has finally begun to meet and exceed Crowne Plaza'
general contractor to enforce our rights in relation
have pursued remedies against the
continuous negotiation with the ground lessor
to construction problems. We have been in
including, among other things,
to our claims against the ground lessor

relative

lease. Through all of this and despite all
and the Hotel is and has been current
of this, we have paid Union Planters its debt service
property".
"
far from being a distressed
is
Hotel
this
that,
only
on its payments. Not
ratio for this loan
to

a claim under an

indemnity contained in the

environmental

value

The loan
and property is

000) Dollars

approximately

of

We are maintaining

ground

sixty- five

with approximately
percent ( 65%)

cash equity

Twenty Million ($20,000,

to pay debt service.
cash,in an amount sufficient

in the property. And, we continue

a reserve account with

your

institution,

in

And, we continue to pay debt
dealing
even
with and discussing these issues is
service. The only reason that we are
debt
service coverage ratio during
to achieve a modest
because Crowne Plaza failed
Hotel. had Crowne Plaza achieved
the height of the last tourist season.The
would have been granted an automatic extension of the loan. The
said debt service

to

cover

months' of debt
4)
four (

service payments.

coverage,

catastrophic effect on tourism by the terrorist attacks and problems with
Hotel by Crowne Plaza combined to such

management

of

the

pay
required coverage was not achieved. But,we continued to
letter agreements
of
a
have
series
We
into
debt service.
entered
and which contemplate extensions to February, 2006 provided that
providing for short extensions
acceptable levels of debt service coverage are achieved. We strongly believe that those levels

an extent that the

achieved in view of the manner in which the Hotel is
the last several weeks
being managed. We have been negotiating with Town Park over
Park will provide
Town
whereby
Pl
a
nters
Union
to finalize an agreement that will be acceptable to
the loan to
for
the guaranty performance of the Hotel that you require in order
result
be extended. We understand that your requirement for Town Park' s guarantee was the
Park' s ability to
of the Bank' s loss of confidence in Town
such
accurately forecast its future performance or its ability to achieve operating results consistent with
maintained as
projections. In view of the amount of the cash collateral account that is already being
currently

can now be

security

for the loan,the net

that you

are

amount

seeking to be guarantied by Town Park is approximately
to you from

Seven Hundred

One Thousand ($701, 000) Dollars. We have provided financial statements

Park which evidence ( and you have confirmed) that Town Park has a net worth
very substantial
of Fifty Seven Million ($57. 000, 000) Dollars. This net worth is
to
relative

Town

03

13/2003 1~:

08/

2~3~
305~~
5
PEEBLES

FAX

005 Mr. Roy D. Tanis August 12.2003
DEVELOP OO. 1/
these circumstances. That
Nevertheles , you have rejected Town Park as a guarantor under

ATLANTIC
Page

3
rejection is
of

the

clearly unreasonable and unjustified in

view

net worth of the proposed

to be guarantied.
s Fifty
Park'
service. Despite Town
are
insisting
worth, you
that its parent.

guarantor

and the

amount

And we continue to

pay

debt

Dollars net
57, 000. 000)
Seven Million ($

We have explained to you that Intercontinental will not give any
to schedule a call between
guaranties. We have been attempting during the last week
senior officer of Intercontinental Hotels in London, but we have been unsuccessful due
you and a
being unavailable. We finally were able to schedule a call for tomorrow, but you have

Intercontinental Hotels, guaranty

to

your

now

canceled it.

the amount.

You

stated

last week that

your position. We
would not be productive and that you were not going to change
asking for deferral
not
are
loan
amount
.
We
in
a
reduction
the
are not asking for
payments. What we are asking for is for Union Planters
any
of
abatement
or
responsibly as an important
to act reasona- bly under the circumstances and to act
are asking that
We
member of this community which is so dependent on tourism.
Union Planters comply with our last letter agreement and accept as security
a
the guaranty of Town Park,
for Seven Hundred One Thousand 701, 000)Dollars

such

a call

worth of Fifty Seven Million ($57,
000, 000) Dollars.
significant hotel operator and owner having a net
6)weeks away from the commencement of the busy part of the
We are only six (
and minimize the
year that will minimize any risk that the Bank will have
chances of
ever having to draw on the
we expect Growne

Plaza

to

exceed

guaranty. Based

upon current bookings,

its forecast and budget for October.

We

ask
that you reconsider the position
you have taken.And, while you
that

are

doing

debt
so,

service will continue
to be paid. Sincerely, RDP
PALM HOTEL. LP
General
By:PADC Hospitality Corporation I,
Partner cc:R.
Donahue Peebles HCF

ROYAL

3/
20.
0314: 04

1,
0&/

FAX
LOP

305H2, 1345 PEEBLES
005/ 005 City

Beach,

ATLANTIC DEv~
of Miami

City

Manager City of Miami
Beach, City Attorney

550 Biltmore
Way
Suite 970 Coral

Gables,

FL 33134

442305)

4342

Fax: (
305)

442-4345
Corp.

Peebles

Atlantic Development

03

Memo o W

3/

01
Re:

G'

J

To:Cristina Cuervo w a From: Richard

Date:

8/

13/

03

CC:

A.Matlof

P ROY~ L ~ ALM
RI?

HOTEL, L.P.

NO.

2801 REFERENCE

DESCRIPTION INVOICE

DATE INVOICE

AMOUNT DISCOUNT

TAKEN AMOUNT
0308

RP-

PAID

8/
1/

l

CHECK

2003

l~
l.

DATE CHECK

NO.PAYEE DISCOUNTS TAKEN CHECK AMOUNT
8/6/ 03 2801
Beach Redevelopment

52 11,
' :

291.

03 41,

August

Agency 41,
$
291.
ROYAL PALM
52 RDP
HOTEL, L.

Miami

2ND
ST.,

100
P.

STE.

S.E.

4650

BRICKELL
PLANTERS
BANK MAIN
OFFICE.
1221

8411670 2801 I
AVE. MIAMI, FLORIDA 33131 63CHECK NO. 2801 Aug
003 41~
R~~
52 1l

J

MIAMI,
FL

33131

Iu

s
UNION

g

a 1: