For a massive building and renovation project that paves its way to join the J.W. Marriott franchise next year, Turnberry Isle Resort and Club turned to the Bank of China for financing and to a former Turnberry in-house lawyer for outside legal advice.
Turnberry Associates obtained a $248.9 million mortgage from Bank of China’s New York branch to cover existing debt and the construction of about 280 more rooms in a new tower, ballrooms and modern meeting rooms. The company tapped Arnstein & Lehr partner Lori Hartglass, a former Turnberry in-house counsel for 10 years, to support its review and negotiatons over hundreds of pages of documents in the deal with the Chinese bank.
“They have an in-house legal team that is highly skilled,” Hartglass said of Turnberry. “However, because of the size of this loan, they thought they would be better off reaching out to outside counsel as a second pair of eyes.”
About 15 years ago, Hartglass was a partner at Holland & Knight who often did work for Bank of America, a Turnberry lender. After 18 years at Holland & Knight, Hartglass moved in-house at Turnberry, where she got to know the company and its preferences when it came to major loans. Five years ago she left for Arnstein & Lehr, where she is part of the firm’s real estate practice and deals with all legal aspects of financing, construction, acquisition and sales on projects throughout the U.S., including shopping centers, malls, condominiums and hotels.
“This loan evidences that lenders have an appetite for financing iconic properties,” Hartglass said of the Bank of China deal.
For years, the 300-acre Turnberry property in Aventura has been one of the largest hotels in the Marriott Autograph Collection franchise, with a host of amenities including a golf course, pools and restaurants, but with just under 400 rooms.
The hotel, which is 100 percent owned by the Soffer family, was built in 1970 and later sold by family patriarch Donald Soffer. His children Jeffrey and Jackie Soffer later repurchased it. It has sentimental value to the Soffer family, said Turnberry Associates president and chief financial officer Aly-Khan Merali.
“This a jewel of the family portfolio,” Merali said. “We are spending a lot of money to reposition the asset to put it in the position it deserves to be in, which is the luxury segment because of all of the amenities.”
Turnberry’s long-term plan had been to convert the property to the J.W. Marriott brand, in part to attract conventions, but the building needed to expand first. The lender would need to be flexible to cover the hotel’s financing needs but also agree to a major branding change. Turnberry turned to Bank of China because it already had worked with the bank with other properties in the past, and it had experience in large, complex real estate loans and hotel brands, Merali said.
“They provided us with the flexibility that we were looking for,” Merali said. “They took out the existing senior debt and provided us with future construction component. They supported our business plan regarding the J.W. conversion. There’s a lot of moving parts associated with that.”
Bank of China paid off an existing $112 million mortgage Turnberry had through Wells Fargo and added an additional $136.9 million to finance the construction.
The resort will be rebranded as a J.W. Marriot upon completion of the expansion and renovations, which are already underway, Merali said. After the renovations the hotel will have about 680 rooms and 110,000 feet of meeting space.
Turnberry will pay a franchise fee to use J.W. Marriott’s booking and reservation system and for marketing, but Turnberry will continue its full ownership and will operate the hotel, restaurants and golf club.
Construction and rebranding is expected to be completed near the end of next year before Christmas.
The Soffer family’s hotel portfolio also includes the Fountainebleau, a Hampton Inn, two Courtyard Inns, a Residence Inn, a Hilton in Nashville and a 530-room J.W. Marriott in Nashville opening next summer. The company employs about 4,300 people, Merali said.
Mario Romine, Turnberry’s senior vice president and general counsel for special projects, led the company’s in-house team on both J.W. Marriott deals. The Nashville J.W. Marriott was financed through a Goldman Sachs affiliate, Merali said, and was handled entirely in-house and separately from the property in South Florida. In the Turnberry property deal, the Bank of China was represented by Troutman Sanders.
Reporting to Romine as she reviewed the contract with the Bank of China for Turnberry, Hartglass said she identified some elements of the documents that were missing and advised on changes to make the transaction go extra smoothly for her longstanding client.
For instance, big developers like Turnberry have to juggle reporting obligations for multiple lenders. Setting those deadlines as close together as possible can make the process much easier.
“Having done loan work for bank clients for decades … I have a sense of which provisions are negotiable, and I can offer alternative language which can be more favorable to the borrower yet acceptable to the lender,” Hartglass said. “I try to make a loan more user-friendly for them because I know the things that are important to them.”