LTC 216-2003
CITY OF MIAMI BEACH
Office of the City Manager
Letter to Commission No. 2 J6~ 2":;/J3
m
From:
Mayor David Dermer and Date: September 11, 2003
Members of the City Commission
Jorge M. Gonzalez ~#" ~ /'
City Manager U '0
RDP ROYAL PALM - SEPTEMBER 10, 2003 TERM SHEET
To:
Subject:
Attached you will find the Term Sheetforwarded on September 10, 2003 and agreed to by
Don Peebles' attorney as reflected in the attached e-mail. As this e-mail states, there exits
an additional issue related to Town Park's equity ownership in the project that may require
a Lease Amendment. Additionally, I have attached a NPV calculation comparing the
current terms of Agreement, the April 30, 2003 LOI and the original Lease Agreement. We
anticipate bringing an LOI based upon the negotiated terms attached to the October 15,
2003 City Commission meeting and addressing the Default declared by Union Planters
concurrent therewith.
If you have any questions, in the meantime, please contact me.
JMG\~b\rar
F:\cmgn$ALL\L TC-Q3\RDP RoyalPalm TermSheet Sept10.CMC.rar.doc
c: Christina M. Cuervo, Assistant City Manager
Patricia Walker, Chief Financial Officer
Raul Aguila, First Assistant City Attorney
Cuervo. Christina
Subject:
Hoffman, Sluart [shoffman@hunlon.com]
Wednesday, September 10, 2003 8:58 AM
Cuervo, Christina; Joel N. Minsker Esq. (E-mail); R. Donahue Peebles (E-mail); Richard
Mallof (E-mail)
Royal Palm
From:
Sent:
To:
~
~
RoyalPalmStatusRe
port.9-l0 vs ...
Christina, in response to your call to me this morning and based upon our discussions with Don,
I have revised the definition under 5 F. I had trouble with the system, so your blacklining is still
shown and my changes are not, but you should not have any problem seeing what I did. I made
no other changes to the document. This form is acceptable to Don and can be represented to
the Commission as such subject to our understanding that the Town Park 1 % issue must be
dealt with.
STUART K. HOFFMAN, ESQ.
HUNTON & WILLIAMS
1111 Brickell Avenue
Suite 2500
Miami, FL 33131
Tel. (305) 810-2594
Fax. (305) 810-1603
shoffman@hunton.com
www.hunton.com
The information in this electronic message may be privileged and confidential and is intended only for the use of the
individual(s)andlor entity(entities) named above. If you are not the intended recipient, you are on notice that any
unauthorized disclosure, copying, distribution, or taking of any action in reliance on the contents of the electronically
transmitted materials is prohibited.
1
1)
2)
9/10/03 TERM SHEET FOR LOI TO AMEND
ROYAL PALM CROWNE PLAZA RESORT AGREEMENTS
The Lease will be amended to provide that the Base Rent and Additional Rent
due from Hotel Opening Date of May 15, 2002 to May 15, 2003 will be deferred
and payable over a 10 year period commencing in Lease Year 5 through Lease
Year 14. (Refer to attached Exhibit)
The Lease will be amended to provide that the Additional Rent and Incentive
Rent due in Lease Year 2, 3, 4 and 5, will be deferred and payable over a 10
year period commencing in Lease Year 6 through Lease Year 15. (Refer to
attached Exhibit)
3)
Beginning in Lease Year 2, Base Rent shall be due and payable in accordance
with the Lease terms.
4)
The Lease will be amended to provide that the outside date for payment of the
Purchase Price (which includes the 8% return) will be extended from 25 to 99
years.
5)
The Refinancing Times stated in Section 11.13(a) of the Lease shall be changed
to on or prior to the beginning of the fifth (5th) year after the Hotel Opening Date
("First Refinancing"); on or prior to ten (10) years after the closing of the First
Refinancing ("Second Refinancing") and then every tenth (10th) anniversary of
the Second Refinancing thereafter provided that the maturity date of any
refinancing that extends beyond the next required Refinancing will not have to be
repaid prior to its maturity provided said maturity date is no later than twenty (20)
years from the last refinancing; provided further however, that when Tenant
refinances the Balance of its Debt, the Net Refinancing Proceeds, as defined in
Section 11.13(b) of the Lease shall be applied to the extent available in the
following order:
A. To Owner to pay the deferred Rental described in items 1 and 2 above;
B. 50% to Owner to pay the 8% return applicable as part of the Purchase
Price accrued and unpaid to date; and 50% to Tenant to repay Town Park
(Management Company) for Cost Overruns* paid by Town Park
(estimated at $5 million).
C. To Owner to pay the balance of the 8% return applicable as part of the
Purchase Price accrued and unpaid to date;
D. 50% to Owner to pay the Purchase Price (which includes the 8% return)
for Owner's Interest in the Premises; and 50% to Tenant for Tenant Cost
Overruns* paid by Tenant (estimated at $2 million);
E. To Owner to pay the balance of the Purchase Price (which includes the
8% return) for Owner's Interest in the Premises;
F. To Tenant if any funds remain after paying in full the amounts in 6A-6E
above.
*Any Cost Overruns will be calculated net of (1) any Clark settlement
proceeds paid to Tenant, directly or indirectly but (a) net of attorneys and
other professional fees and court costs not reflected in Tenant's cost
overrun calculation and not advanced by Town Park and (b) the Clark
Credit to the extent paid to Owner, and (2) any prior overrun or equity
repayments from the two (2) prior future advances paid to Tenant. Cost
Overruns will be subject to a full accounting and review by the Owner, with
the exact amounts in 58 and 50 to be agreed upon by the parties.
6) In Lease Year 25, and every 10 years thereafter, Tenant shall pay Owner any
accrued and unpaid portion of the 8% return as follows:
A. Any and all unpaid portions of the 8% return accrued in Lease Years 1-25
will be amortized and paid over 10 years in Lease Years 26-35.
B. Any and all unpaid portions of the 8% return accrued in subsequent 10
Lease Year increments (Le. Lease Years 26-35, 36-45, 46-55, 56-65,66-
75, 76-85, 86-95, and 95- expiration will be amortized and paid over 10
years in the respective succeeding 10 year Lease Term periods (Le.
Lease Years 36-45, 46-55,56-65,66-75,76-85,86-95, and 95-expiration,
respectively) and will be referred to as (the "Amortized Return").
C. Commencing on Lease Year 35 and for each Lease Year thereafter, to the
extent that the Base Rent, Additional Rent and the "Amortized Return", in
aggregate, payable in each Lease Year is less than $800,000, as adjusted
for inflation (the "Rental Cap"), then in such Lease Year, Tenant shall pay
the difference between the "Rental Cap" less the aggregate of Base Rent,
Additional Rent and the "Amortized Return" for said Lease Year, as
Mandatory Incentive Rent (the "Mandatory Incentive Rent"). If in any such
Lease Year, on or after Lease Year 35, Incentive Rent is payable, such
Incentive Rent shall be due and payable even if such payment results in a
payment that Year in excess of the Rental Cap. "Rental Cap" is defined
as the $800,000 amount which shall be increased at the beginning of the
tenth (10th) Lease Year, and every five (5) years thereafter, in the
proportion as the percentage increase in the GDP Implicit Price Deflator
Index from the Hotel Opening Date.
7) Lease terms, such as those relating to Rental inflation increases, that are
adjusted in increments through Lease Year 25, will be extended consistent with
the new 99 year Lease term.
8) The Lease will be amended to provide that in the event of any Sale, all deferred
and/or unpaid Rental and the 8% return shall be due and payable. Any Sale will
cause all Rental, including any deferrals thereof, as stated in the Ground Lease
Amendment to revert to the original Rental without any deferrals thereof, as
provided in the original Lease.
9) All remaining terms and conditions of the April 30, 2003 LOI, not in conflict with
the terms provided for herein, shall remain unchanged and are incorporated by
reference herein.
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