Borders Hotel Corp. Case

For Investment A: (40 – 25)/ 10= 1.5 standard units= close to 94% to get the 40 million in return

Using the tables (shown below and in Exhibit 1) to calculate cash flow before financing and net proceeds from sale, a DCF method was used to arrive at a NPV of $216,789 and IRR of 13.3% for a 5-year holding period at assumed vacancy of 5% (Exhibit 1). As mentioned earlier, this IRR exceeds the 12.5% initially set out, and therefore seems like a feasible project. Using a higher vacancy rate of 7%, however, lowers the IRR to a point that is no longer feasible. If holding all else same, a vacancy of 7% on the building yields a NPV of $122,420 and an IRR of 11.47% (please see table below and Exhibit 2). This IRR does not meet the minimum required and therefore the assumption of vacancy rates staying at 5% is paramount to our analysis. This aspect of the analysis is considerably risky as an assumed vacancy rate does not necessarily yield a guaranteed rate. If vacancy happens to rise, then the valuation of the property is far different than what was originally envisioned.

1. The first step to evaluating the cash flows is to conduct the depreciation tax flow analysis. Depreciation is not a cash flow, but the depreciation expense lows the taxes payable for the company. As a result, the tax effect of deprecation needs to be calculated as a cash flow. There are two depreciable items on the company's balance sheet the building and the equipment. The equipment is known to have a seven year depreciable life, which will be assumed to be straight line. The building is also assumed to be subject to straight line depreciation, this time of forty years. The tax saving reflects the depreciation expense multiplied by the tax rate, which in this case is assumed to be 28%. The following table illustrates the tax effect in future dollars of the depreciation expense:

Lambert Hotel is in second rounds of negotiations with AAA HotelCo of a possible merger between the two companies. Lambert is a strong brand with a luxurious and upscale tres comfortable Michelin rating, and AAA is rated at mid-scale category of equivalent ranking. Culturally, there is a difference in the approach to business mergers. Time wise, Lambert is eager to close the merger with AAA or consider the alternative value that is a safe bet.

Table 7 in the detailed analysis above shows the summary of the Discounted Cash Flow analysis performed for each of the four potential properties considered for investment. From the chart below, we observe that of the four properties, TFB has the maximum increase in reversion value at the end of the holding period, i.e. 10years. On a primarily income generation potential basis, Alison Green, with a Net Present value of the future rents at $734.29 looks attractive among the four options. Looking at the Investment ranks of the four properties with Simple returns and Discounted returns variables, Alison

It has been argued since the start of immigration whether or not aliens (undocumented or documented) should have the same equal rights as Americans when it comes to employment, education, and benefits in the United States. Despite what individuals believe or disbelieve, under certain acts, codes, laws, and the U.S. Constitution, all aliens have rights, regardless of their immigration status. In this paper I will discuss an overview of the court case, Patel v, Quality Inn South, which deals with an undocumented alien who was able to recover funds from his former employer. I will explain the acts that impacted the case, whether I agree or disagree with the outcome of the case, and my personal opinions of the case itself.

Monthly 50% Monthly Rooms $2,956,500 $2,217,375 $1,478,250 Leases $180,000 $135,000 $90,000 TOTAL REVENUE $3,136,500 $2,352,375 $1,568,250 Expences TOTAL VARIABLE COSTS $454,000 $340,500 $227,000 TOTAL FIXED COSTS $1,403,000 $1,403,001 $1,403,002 TOTAL EXPENSE BEFORE IT $1,857,000 $1,743,501 $1,630,002 EBIT

Exhibit 6 tells us the financial analysis of each of the real estate properties. The Fowler Building has the greatest increase in capital value at 41.49%, while Ivy Terrace has the least increase in capital value with 25.00%. In year 10, if the clients decide to sell their property the Fowler Building will have had the greatest increase in value. Its sale price in September 2003 is estimated at $9,400,000 and in the 10th year in 2013 the estimated sale price would be $13,300,000.

Mr. Alexander is a gentleman that is looking to build his investment portfolio through residential real estate. He is looking at investing in a 4-plex in a historical district located within Boston, Massachusetts. The building is located on Revere Street and has a listing price of $350,000. Mr. Alexander is evaluating the possible commitment to understand what he stands to gain from the annual cash flows while at the same time understanding the risks involved. The subject property is located within a historical district and is not yet capable of housing tenants. Property will require significant improvements prior to inhabitation. Client

The iconic Ahwahnee Hotel sign stolen on eve of Yosemite name changes due to be a cover up on the fierce legal battle between the park and its operator. The spokesman Scott Gediman said the sign was taken sometime Saturday night or Sunday morning. The Ahwahnee name has been in place since 1927, but will change officially at 12:01 a.m. Tuesday of March first when Aramark takes over the park’s concessions contract from Delaware North. The park aroused the name changes as of January of this year. Delaware North contends the trademark associated with these buildings, the claim which lead to many outraged which led an intense legal battle with the park still working its way through the courts. The name of Yosemite has been with the park for 100

Marriott is renowned for its elegant and comfortable hotels and resorts. The company caters to a targeted customer base, ranging from the frequent corporate business traveler to the family enjoying their occasional weekend get-away. Marriott has continued its rise in the lodging, contract services, and restaurant industries. The company continuously strives to meet the needs and wants of its customers while strategically maneuvering the rigors of today’s competitive and ever-evolving market of glamorous destinations and convenient services. In order to remain relevant in a highly-competitive environment, Marriott must strike that successful balance of minimizing costs, and gaining and effectively

The amount of extra sales that would be required to cover this cost of 300,000 would be

Changes to the rent roll and vacancy rate as well as the addition of debt cost in the mode yield an npv of $553k. When the initial investment of $400k is taken into consideration this yields a total npv of $153k. This is a positive NPV and therefore the investment is not a losing proposition. However this should be compared to other investments.

Option 2 (Proceed with Mid-Rise Apartment Complex, Selling in Year 10): While replacing the current structure with a more appealing mid-rise apartment complex would increase the market value of the property, it would also require financing and additional investments. Thus far, Sexton has run into several problems, beginning with the planning commission, and now higher cost estimates, financing and timing issues. Even if Sexton were to obtain financing and somehow meet the January 2005 target date, his original estimates of rental income and cash flow analysis are still not guaranteed. Exhibit 2 provides a net present value range between 103,000 and $214,000 for proceeding with the mid-rise apartment complex and selling in year 10 based on a range of cap rates.

Financing in hospitality industry, like in many other industries is of utmost importance and should be handled with extreme caution as it represents success or failure of the business. The following paper focuses on the most important aspects in financing in hospitality.