Newly Launched Ramsfield Hospitality Finance Betting On Future Of Hospitality-Industry Investment

NEW YORK— Citing today’s distressed hospitality real-estate environment as “a great time to get [financially]involved in the hotel industry,” Richard Mandel— former president of Kennedy-Wilson’s Commercial Investment Sales Group— has formed Ramsfield Hospitality Finance (RHF) here, a new investment firm set up to provide mezzanine financing for hotel owners and investors alike. Mandel’s joint-venture partner in this undertaking is an affiliate of Cargill Value Investment, based in Minnetonka, MN. With an eye turned particularly toward providing structured finance alternatives for distressed hotel properties, Mandel claimed: “The time is right to launch Ramsfield Hospitality Finance as we feel hotel property values are close to bottoming. The weak economy, terrorism and war jitters and structural changes within the industry have significantly impacted most hotels’ underlying cash flows. When you consider these factors [in tandem]with a difficult lending environment, we feel it’s an excellent time for RHF to grab a meaningful share in this sector.” As Mandel explained, the new company is set up to provide subordinate loans ranging from $3 million – $12 million on higher-end properties located in the top 25 U.S. hotel markets and resort destinations and that are valued at $15 million to $60 million. “However,” Mandel told HOTEL BUSINESS®, “portfolio loans can easily exceed the $70 million mark.” Mandel offered this start-up opportunity is not only “a great way to pick my spot” for involvement in an evolving real-estate marketplace, but following this capital-sourcing model similarly makes for “a most comfortable way of getting money out in the market. As a mezzanine lender, we can help move a deal’s capital structure from as little as 50% up to as much as 80% [with the owner’s equity filling the remaining gap].” With the dominant portion of the firm’s financial war chest put up by its Cargill-affiliate partner, Mandel maintained RHF fully intends “to write— or buy— in the neighborhood of $150 million of this type of paper over the course of the coming 18 months.” He further noted: “Our capital will be competitive and our execution streamlined so we can quickly respond to borrowers’ needs.” As for the type of return Mandel and his associates expect on their combined efforts (and cash investments), it was suggested: “Much will depend on loan-to-value ratios, the type of lodging properties involved [in the transaction], the location of those properties, the quality and credit-rating of the borrower, etc.” Capping some five years of planning, Mandel has surrounded himself with several other experienced industry professionals to grow RHF going forward. These include: Managing Director Raymond Anthony, a 20-year veteran in real-estate lending with Allegiance Capital Partners and Nomura Securities; and Senior Associate Erik Warner, formerly with Jones Lang LaSalle and HVS International.