Business Case Studies & Business Publications

It’s a Residence; It’s a Hotel: It is Re...

Das, Prashant, Gup...

Case

It’s a Residence; It’s a Hotel: It is ResiTel!

Das, Prashant; Gupta, Ashish

IIMA-FA0569 | Published November 16, 2022 | 12 pages Case

Collection: Indian Institute of Management, Ahmedabad

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Learning Objectives

Midway through construction, a hotel developer realised that costs had risen too much to be feasible for equity capital. They repositioned the asset as a ResiTel wherein each suite would be sold as a condominium unit to retail buyers. This called for setting up two separate entities: one (PropCo) for asset management and the other (LeaseCo) for operating the hotel. Unit owners would earn a regular share of hotel income. The lenders protected additional sale-risk by more conservative loan terms. The developer must analyse the feasibility of the repositioned asset.

Steps in financial feasibility analysis of a commercial real estate project; Estimating sources and uses of finance Vacation/ second home markets; Workings of a condominium hotel property:OpCo/PropCo breakup; Possible Exit strategy for investors