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HomeMy WebLinkAbout6/15/2005 - STAFF REPORTS (18) 2 V N * k k COIo4nYf0 5A City Council Staff Report DATE: June 15, 2005 NEW BUSINESS SUBJECT: Assignment of Wyndham Hotel Land Lease to Highland Hospitality LP FROM: David H. Ready, City Manager BY: Finance Department SUMMARY The Wyndham Hotel is in the process of being sold to Highland Hospitality, a limited partnership. It is on Indian land that is subleased by the City of Palm Springs to eleven limited partnerships which own the hotel. The City has been asked to consent to the assignment of the land sublease to the new owner. RECOMMENDATION: 1. Approve Minute Order No. , approving the assignment of the land sublease underlying the Wyndham Hotel to Highland Hospitality LP. 2. Authorize the City Manager to execute such documents as may be necessary to reflect Council's approval. STAFF ANALYSIS: The Wyndham Hotel is built on Indian land subleased by the City of Palm Springs to the eleven limited partnerships which own the hotel. The City bought the Master Lease from SENCA Corporation in 1989, The hotel is in the process of being sold to Highland Hospitality, a limited partnership. The City has been asked to consent to the assignment of the land lease to the new owner. All of the terms of the original lease will continue in full force and effect and staff believes that there is no financial impact to the City. Highland Hospitality LP is a wholly owned subsidiary of Highland Hospitality Corporation, a Real Estate Investment Trust (REIT). The company has 19 hotels in 10 states, with a total of 5475 rooms. In 2003, it had gross operating revenue of over $133 million. ITEM NO. 5.A. City Council Staff Report June 15, 2005 -- Page 2 Assignment of Wyndham Land Lease The City's primary concern is that the annual land rent, approximately $860,776, is paid to the City each year on time. Staff asked Mr. Calvin Hollis of Keyser Marston Associates, Inc. to review the latest financial reports of Highland Hospitality Corporation. His conclusion is the proposed assignee has substantial real estate and cash assets and they have financed their properties conservatively. He has concluded that Highland Hospitality would meet the City's requirements with respect to both experience and financial capacity. David H. Ready �r Craig raves City Manager Dir or of Finance & Treasurer Attachments: Minute Order Assignment of sublease MINUTE ORDER NO. APROVING THE ASSIGNMENT OF THE LAND SUBLEASE UNDERLYING THE WYNDAM HOTEL TO HIGHLAND HOSPITALITY LP I, James Thompson, City Clerk of the City of Palm Springs, hereby certify that this Minute Order approving the assignment of the land sublease underlying the Wyndam Hotel to Highland Hospitality LP, was adopted by the City Council of the City of Palm Springs, California in an meeting thereof held on the day of ,2005. James Thompson, City Clerk RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: MAIL TAX STATEMENTS TO: [FOR RECORDER'S USE] ASSIGNMENT OF GROUND SUBLEASE This ASSIGNMENT OF GROUND SUBLEASE (this "Agreement" is made as of the day of 12005, by and among AP/APH PALM SPRINGS, L.P., a Delaware limited partnership ("Assignor"), HH PALM SPRINGS LLC, a Delaware limited liability company("Assignee") and THE CITY OF PALM SPRINGS, a municipal corporation (the "City"). Recitals A. The City is the current holder of the lessee's interest under that certain Business Lease No. PSL-315 dated February 28, 1984 between the 18 individuals named therein as lessor (collectively, the "Ground Lessor") and Shale Energy Corporation of America, a Texas corporation, as lessee, a memorandum of which lease was recorded on December 30, 1985 as Instrument No. 293741 in the Official Public Records of Riverside County, California, together with that certain activation letter dated May 1, 1984, executed by Shale Energy Corporation of America(as approved by the United States Department of the Interior, Bureau of Indian Affairs (the "BIA") pursuant to an approval dated July 23, 1984, which approval was modified by a Modification of Approval of Option dated August 20, 1984) and that certain Amendment to Lease dated as of October 28, 1998 between The United States Secretary of the Interior(the "Secretary"), as administrator for Ground Lessor, and the City, a memorandum of which was recorded on November 9, 1998 as Instrument No. 487614 in the Official Public Records of Riverside County, California and approved by the BIA pursuant to an approval dated as of October 29, 1998 (collectively, the "Master Lease"). B. A portion of the property covered by the Master Lease is subleased to the Assignor pursuant to that certain Sublease (Hotels I-XI) dated December 31, 1984 (the "Sublease"), by and between SENCA Palm Springs, Inc., a California corporation, a predecessor-in-interest of the City, as sublandlord, and the Community Redevelopment Agency of the City of Palm Springs, California, a predecessor-in-interest of Assignor, as subtenant, a memorandum of which was recorded on December 30, 1985 as Instrument No. 293742 of the Official Public Records of Riverside County, California, as supplemented by the certain Supplement (For Purpose of Conforming Legal Description) to Sublease recorded on December 20, 1993 as Inshument No. 504374 of said Official Public Records, as amended by that certain Amendment to Sublease, a memorandum of which was recorded on November 5, 1998 as Instrument No. 487613 of said Official Records and approved by the BIA pursuant to an approval dated as of October 29, 1998, I-LA/835602.1 1 as assigned to Assignor by Assignment to Sublease dated as of November 5, 1998 recorded November 9, 1998 as Instrument No. 487612 of said Official Records and approved by the BIA pursuant to an approval dated as of October 29, 1998, covering the real property described on Exhibit A attached hereto and incorporated herein by this reference (the "Leased Premises"). C. Assignee is purchasing all of the interest of Assignor in and to, among other things, the leasehold estate in the Leased Premises and the hotel known as "Wyndham Palm Springs" and the other improvements (collectively, the "Improvements") located on the Leased Premises. D. Assignee is transferring all of its interest in the personal property included within the Improvements to [HHC TRS OP LLC, a Delaware limited liability company] ("Tenant"), an affiliate of Assignee and will enter into a sublease of the Leased Premises and all of the real property included within the Hmprovements to Tenant (the "Tenant Sublease"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Assignment by Assignor. Assignor hereby assigns and transfers to Assignee all of Assignor's right, title and interest in and to the Sublease and the leasehold estate created thereby and hereby quitclaims, conveys, transfers and assigns to Assignee all of the Assignor's right, title and interest in and to the Improvements. 2. Acceptance by Assignee. Assignee hereby accepts the foregoing assignment and transfer of the Sublease and promises and agrees to pay all rent and to faithfully assume and perform all covenants, stipulations, agreements and obligations under the Sublease accruing on and after the date hereof or otherwise attributable to the period corn mencing on said date and continuing thereafter. Assignee hereby acknowledges that (a) this Agreement is subject and subordinate to all the terns, covenants and conditions in the Master Lease and the Sublease; and (b) except for the transfers and subleases to the Tenant as set forth in Recital D above, Assignee shall not have any right to further assign its interest under the Sublease or sub- lease any property subject thereto except in accordance with the terns and provisions of the Sublease and the Master Lease. 3. Consent by the Citv. The City hereby consents to the assignment of Assignor's interest in the Sublease and the leasehold estate created thereby to Assignee and further consents to Assignee effecting the transfers and entering into the Tenant Sublease as set forth in Recital D above, conditioned on the approval of the assignment by the BIA as required by Article 44 of the Master Lease. The City and Assignee agree that transfer and entry into the Tenant Sublease with the Operator shall not relieve Assignee of its promise to pay all rents and to faithfully assume and perform all covenants, stipulations, agreements and obligations under the Sublease occurring on or after the date hereof or otherwise attributable to the period commencing on said date and continuing thereafter. l-LA/835602.1 2 4. Performance Under Master Lease. Assignee covenants and warrants that it has received, read and approved a fully executed copy of the Master Lease, it frilly understands and agrees to be subject to and bound by all of the covenants, agreements, terms, provisions and conditions of the Master Lease to the extent applicable to the Leased Premises, and further covenants not to take any action or do or perform any act or fail to perform any act that would result in the failure or breach of any of the covenants, agreement, terns, provisions or conditions of the Master Lease on the part of the"Lessee"thereunder. 5. Tenant Sublease. Assignee agrees that, pursuant to the Tenant Sublease, Tenant will be required to assume the same obligations to perform under the Sublease and Master Lease that Assignee has agreed to assume pursuant to paragraphs 2 and 4 hereunder. The Assignee and City agree that the Tenant shall not have any right to further assign its interest in the Tenant Sublease or sublease any property subject thereto except in accordance with the terns and provisions of the Sublease and the Master Lease. 6. Liability. Assignee acknowledges and agrees that the assignment and transfer releases and relieves Assignor from all liability under the Sublease and the Master Lease and that Assignor shall not remain liable under any of the teens, conditions, and covenants of the Sublease or the Master Lease from and after the date hereof. 7. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be a duplicate original, but all of which together shall constitute one and the same instrument. 8. Severability. If any provision in this Agreement is held by a Court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in fall force without being impaired or invalidated in any way. 9. Governing Law. This Agreement shall be governed by and construed according to the laws of the State of California and shall be deemed to have been executed in Palm Springs, California, for purposes of jurisdiction and venue in any action or proceeding to interpret or enforce its terms or provisions, irrespective of the actual location of its execution. 10. Binding Effect. All of the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by each party hereto and their respective successors, executors, administrators or heirs, and all persons claiming by and through them. 11. Attomevs' Fees. In the event that any party hereto brings an action or proceeding for a declaration of the rights of the parties under this Agreement for injunctive relief, for an alleged breach or default of, or any other action arising out of this Agreement or the transactions contemplated hereby, or in the event any party is in default of its obligations pursuant hereto, whether or not suit is filed or prosecuted 1-LA/835602.1 3 to final judgment, the non-defaulting party (or, in the event of litigation, prevailing party) shall be entitled to reasonable attorneys' fees, in addition to any court costs incurred and in addition to any other damages or relief awarded. 12. Further Assurances. Assignor shall execute and promptly deliver to Assignee any additional instrument or other doctunent which Assignee reasonably requests to evidence or better effect the assignment contained herein. 13. Indemnification. Assignor shall hold harmless, indemnify and defend Assignee, its successors and assigns, from and against any claim or liability for an obligation under the Sublease or the Master Lease arising prior to the date hereof. Assignee shall hold harmless, indemnify and defend Assignor, its successors and assigns, from and against any claim or liability for an obligation under the Sublease or the Master Lease arising on or after the date hereof. I-LA/835602.1 4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. ASSIGNOR: AP/APH PALM SPRINGS, L.P., a Delaware limited partnership By: AP/APMC GP, INC., a Delaware corporation, its general partner By: Name: Title: STATE OF ) ss. COUNTY OF ) On before me, Notary Public, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized eapacity(ies), and that by his/her/their signaturc(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (Seal) Notary Public [Signatures Continued on Following Pages] l-LA/835602.1 5 [Signatures Continued from Preceding Page] ASSIGNEE: HH PALM SPRINGS LLC, a Delaware limited liability company By: Name: Title: STATE OF ) ss. COUNTY OF ) On before me, Notary Public, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (Seal) Notary Public [Signatures Continued on Following Page] l-LA/835602.1 6 [Signatures Continued from Preceding Page] THE CITY: THE CITY OF PALM SPRINGS, a municipal corporation By: Name: Title: STATE OF ) ss. COUNTY OF _ ) On before me, Notary Public, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (Seal) Notary Public I-LA/835602.1 7 EXHIBIT A TO ASSIGNMENT OF SUBLEASE Lots 1, D and E inclusive of Amended Tract No. 20485, in the City of Palm Springs, County of Riverside, State of California, as per map recorded in Book 200, Pages 47 and 48 of Maps, in the Office of the County Recorder of said County. 1-LA/835602 1 8