Wednesday, June 2, 2010

SNDAs, hotels and lawyers

I am going to promote some lawyers other than myself today, because they deserve it.  I'm sure the social media "gurus" out there would say I am a moron for doing so, but I honestly do not care.  This blog is a resource and a fun project for me.  Hire me? Great!  Hire them?  Fine, too.  Hire no one at all?  Do so at your peril....

The law firm Goodwin Procter published what I think is an excellent article on subordination, non-disturbance and attornment agreements (SNDAs) recently that I would like to recommend to my readers.

This particular piece is in the context of hotel acquisitions rather than your "garden variety" SNDA that you might find in an office, retail or industrial deal among the landlord/buyer, tenant and lender.  The article suggests -- correctly in my opinion -- that buyers are getting stuck between the lender and the hotel operator on higher end hotel deals because of the competing interests of the parties.  The lender obviously wants as much control over cash as it can as well as maximum flexibility in terminating the operator and perhaps even reflagging or closing the hotel, while the management company wants the opposite. 

A related concept with hotel franchise agreements is the so-called comfort letter, stating that the lender can keep the flag of the existing brand in place following a foreclosure.  Here is another good article from David Neff at Perkins Coie on hotel due diligence that I happened to stumble across while researching this post.

Of course, some of you may be wondering why I am not talking about garden variety SNDAs, as they are also a hot topic.  I will probably get around to that soon.  If you are dying to read more about SNDAs in the meantime, I commend you to the always brilliant Joshua Stein of Latham and Watkins.  Look around his site and you will find some good materials on SNDAs and otherwise.

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