Entertainment Facility Project
Hi all,
I've hinted around a bit in some of my other posts about the deal I'm working on. I've tapped just about all the sources I can come up with to find an equity partner to move this forward. Since this forum was created, I've contemplated exactly how to word something here. I believe it adheres to the guidelines: it's a real transaction; it involves commercial real estate / raw land; I'm not advertising my services (don't think anyone here needs them anyway); and I'm a principal. I should get bonus points at least for bringing something unusual to the site 
I am specifically looking for an equity partner with experience in one of the following areas (listed in order of preference):
1) timeshare industry
2) hotel
3) retail
4) food services (restaurants, etc)
For all of the above, developers of such facilities would be preferable, but experience flipping within these realms would work as well as the partner could be in charge of finding the end developer.
Now then, the deal. As I've mentioned, I'm not a RE investor pro. I'm using knowledge found here for personal benefit (residential) and professionally specifically for this deal I'm working on. My company is in the themed entertainment industry (i.e. theme parks). Long story, but I have the opportunity to create something that should be very profitable (not to mention gee-whiz and wow-appeal). The land has been located, zoning approvals in place, wonderful board of directors with resume's you wouldn't believe, high tourist populations, proven market for niche entertainment venues, etc., etc.
From a business standpoint, everything works and makes sense financially. I am approached by dreamers all the time that I turn away because they don't have what it takes. I've looked at this project every which way I can to make sure that I'm not what of those dreamers.
The primary source of early revenues is projected to be the hotel/timeshare portion of the project. This is where the RE investor spot comes in. The current idea is to flip this portion of the project to a bigtime developer to generate revenues to create the rest of the project (and as an exit strategy if the equity partner just wants to come in, flip, and leave with a profit). You can use your imagination for what the rest of the project might entail For someone with retail or food experience, the partner would be in charge of leasing out those spaces, etc.
So let me be clear about what you are trying to sell here, HR. What you would like to do is have a developer buy land from you on which to build a hotel adjacent to a proposed entertainment facility which, if you put it together would be the draw to the hotel. In addition you are willing to grant licensing rights to the food and beverage operations inside the theme park or other entertainment facility.
Did I get that right?
If so we would need some specifics about the "deal" you are proposing:
How much money?
How big a Hotel?
When do you think you might break ground on your part of the facility?
Where is the land located, generally?
In addition if I were the kind of guy you want for this deal (which I am not) I would want to know about the market for my hotel if your deal flops. Am I going to be left with an unrentable facility in the middle of nowhere? So information regarding number of rooms in the area and absorption rate of those rooms would be important to me.
So those kind of details are what we had in mind when we wrote the "specific" rule.
I think you are pitching this wrong. Talking about your big deal and then only asking for $50,000 sends mixed messages.
Tell me more about what you want to do with the $50,000.
Where are you at in the process:
What is the nature of your site control? Do you own the land? Have an option? Purchase agreement? What?
You say zoning is in place. Did you get a zoning change or find compliant land? Do you have an application for your proposed use in front of the appropriate gvt. bodies. Do you have building permits?
You say your company is in the theme park business. In what way? Do you own/manage parks now? Or is the company the proposed company to run the proposed park? If the later what credentials do you bring to the table?
I probably am pitching it wrong ... that's why I haven't found the partner yet
I probably won't be answering this in order, but I think it'll cover all the questions.
The land is not secured, it already has the zoning in place. A minor, easy, change to allow mix of timeshare and hotel would be needed (the approval is for hotel). To be more exact, it has approval for hotel, theme park, and retail areas. I am working with the landowners to bring them on board as partners as well. The 50k, with at least an equal match by me, will be to cover attorneys, corporate stuff, land transfer to corp., etc. Partner would be in on the approval of how every dime is spent. Bringing in the landowners as partner is part of the reason for the low funding needs. If the land cannot be secured, partner has the exit option of leaving with what's left, assisting in finding equity partner with deeper pockets to help with creatively acquiring the land, or moving on to another site. Really, the best potential partner would have the RE experience to assist in those negotiations. It's not my forte.
Overall budget for the project will be closer to 200 million. My utilizing my existing company's staff, pre-groundbreaking costs should be kept to architectural and engineering fees (besides legal, etc). Funding plan includes leveraging the land to secure loans, selling retail/food licenses, corporate sponsorships, and of course the main one of leasing out the hotel/timeshare opportunity.
My existing company designs theme parks, rides, attractions, etc. This would be a new corporation for this project. Other people in place have the construction and operational experience specific to this industry. As for my credentials and what I bring to the table, I have a B.S. in electrical and computer engineering, programmed and designed training simulators for NASA, did award winning creative programming work for ad agencies, have been a project manager for a dozen or so years including industrial construction projects and owned my own company for the last 6 or 7 years (3.5 years for the themed services one). I've gathered a team that really is incredible, one with significant Disney experience. I do have someone selected with hotel operational experience (4 marriott startups), but I think this is the area that I'm most lacking in.
My existing company has done the preliminary conceptual design work already. Bottom line, even tho this is a really cool project, the numbers make financial sense, and it does all really boil down to real estate. Great property, great location, needs something great developed on it.
Unfortunately my guy who has experience in these matters is tied up in a number of other things right now and I cannot even get to talk to him for a couple of weeks. [ Edited by commercialking on Date 09/14/2004 ]
Thanks for trying anyway. I may still be looking in a couple weeks. I'll continue to turn over rocks to see who I might find. If anyone else knows someone that may be interested, let me know.
Well I do have some reactions for you now-- got a few minutes on the phone with my contact. Unfortunately none of my news is good.
1) your timing is way bad. Right now the idea of putting anything in Orlando is flying like lead balloons. Especially another amusement park type thing. Even the big guys like Disney are on three years of declining revenues and no end in sight.
2) the hotel vacancy rate in central florida (except the last few weeks in the wake of Hurricanes) is bad enough for the last three years that expecting your hotel to carry the park is probably not happening.
3) There are only a handfull of companies in the country who would even consider this deal and you probably know all of them already. Unless your name is Disney or Great America or one of those guys its almost impossible to raise money for theme parks.
4) Difficult though it is your only real chance of getting this deal done is to pitch it to one or more of the existing operators. Yes, you take the risk of them stealing the idea but the idea is probably dead in the water without that kind of backing anyway.
Hi again,
Thanks for the feedback, even if it appears depressing. From my own research, and knowledge of the industry, I do see it differently. The last three years have not been the best due to 9/11, but it is rebounding. Disney has a whole other set of issues driving their problems (some publicized by Roy, others just seen by insiders). Universal does as well to some extent due to the recent sale and uncertaintly of current ownership. By the time my park opens, the recovery would be complete so now actually is a good time to start this development, even if it doesn't appear to be on the surface. Holy Lands specifically has proven that the market can support other entertainment venues (they are routinely at max capacity, and built on a very very tight budget -- the whole park cost less than Diz or Uni spend on a single ride). Besides, everybody said Walt was crazy 50 or so years ago too.
Now, putting on my business hat, I do see "crazy" dreamers all the time. The guy that wants to build a rollercoaster park in Houston "because Astroworld sucks"; the guy with no experience, no money, but thinks his small city really needs a major park, despite the fact that demographs just simply don't support it; or even the semi-pros that will refuse to budge on building their park unless they get all kinds of government concessions and tax breaks (a hopeful development in Kansas spent in excess of 20 mill for nought on a Wizard of Oz themed park -- there were MANY issues with this one, another put their plans on hold because their tax break wasn't put on the state legislatures agenda).
Anyway, I do have two strong leads on potential partners (both with very deep pockets). One of the two has very strong RE development experience which will be helpful (the other just has deep pockets, which is always nice). Wasn't really looking for deep pockets at this time, but when you find them, can't let them get away
As for the hotel carrying the place, I don't really see it that way. I saw the hotel/timeshare as offering an additional financial leveraging tool. It would be profitable, if for no other reason, than because it's hard not to be profitable in that environment. One of the two hotels that closed in the last year was nice enough, I've stayed there, but it didn't use its land efficiently. It was probably 30 years or more old, and the layout was very spread out, the rooms too dated to charge luxury type rates. I imagine the property taxes killed it more than anything else. The area occupancy rates are medium, not great, but rebounding. The rate, for any other area, would seem like you don't need to build another hotel, but this isn't exactly any other area. Other hotels and timeshares ARE being built AND are being PROFITABLE.
I really do appreciate the attention you've given me and my project. The good and the bad must both be seen. The bad can't be ignored or wished away. I realize funding this might be an uphill battle. My thoughts are that if I can talk the current owners into leveraging the land (still could use a partner to help me with this), find someone with just semi-deep pockets, find a developer to go in on the hotel/timeshare (timeshares are definitely where some money can be made, they average $17k a week), that should put me where I want to be for financing. The value of the land alone would be at least 25% of the development costs. Depending on the appraisal, it could be as much as 50%.
I WILL make this work, I'm too driven at this point. All my profits from my current company are being sent to the park company. Silly thing is I never wanted to own a theme park. I just wanted to build rides for Disney since I was old enough to walk and talk (started off life outside Anaheim). But now I guess I'm straying too far away from RE.
I really am trying to keep this focussed on that. Sooo, since CommercialKing's very much appreciated assistance has fallen on deaf ears, any other takers? Whether or not the business itself is successful may or may not be beside the point (depending on how involved the potential partner wants to get). I mean if you're developing a shopping mall, having the retail outlets be successful is nice to insure future rent payments, but you don't really get involved in their business.
The transaction in question involves Real Estate. I need someone versed in RE creative negotiation, preferably with timeshare/hotel experience/contacts. I want to aquire this land in a partnership with the current landowners, paying them off after a period of time (tentatively 5 years). Arrangement needs to allow for me to be able to leverage the land for future development. I've been corresponding with them, they haven't told me no yet, but I'm just not "good" at this. Potential partner would preferably continue to be on board to find/negotiate with hotel/timeshare developers (alternatively retail, restaurant, etc). Staying on board for the business is strictly optional.
So again, any takers? More questions?
HRparks,
Glad to meet you.
Since you metioned the magic word Creative, I thought I should respond.
I understand where you are coming from, as I have taken ideas like yours from concept to raising money through a public offering.
I was fortunate to meet the King of Time Shares son and how his Dad started and what it took to put his type of investing together, which can be an intregal part of your overall plan.
The most important part of your efforts is what your business plan contains, this is the first step in raising money for a project with what has been described so far.
So, my question would be do you have a business plan geared to awaken interest from potential investors, then we can go from there.
John $Cash$ Locke
Hi John,
The structure of the plan seems to hit on all elements, and I've slanted it towards the hard number side of things while trying not to make it a dry boring read. I have of course tried to put some of my passion in there when describing the project, but beyond that, my thoughts were that investors would really be basing their decisions on the numbers. The few people that have reviewed it said it was good, but there's always room for improvement.
Thanks for the reply. I do have a business plan. Although I've reviewed several for clients, I've never written one myself before so I can't honestly say if it is adequate. I look at it weekly to see if there is something I can change or add to do make it more inviting. It's not that a lot of investors have looked at it and turned me down tho. It's that I haven't found the investors to show it to in the first place
HR,
Your business plan needs to be reviewed by someone with a strong marketing background. I do not mean to demean you in any way as I can see you are putting your heart and soul in this project, but unless you have a very strong marketing background let an expert take what you have done and polish it to make sense to people you are trying to $reach$.
There are many more questions I have, such as do you have a conceptual drawing of the overall project, would you be willing to bring in some heavy hitters on your Board of Directors, etc., but for right now your business plan is key before you approach anyone.
I found that certain attorneys control considerable amounts of capital for their clients, as a matter of fact I would not rule out the ones who specialize in Blind Pools. Use caution here as you need an attorney with a solid track record in this type of investing, not one of these send me money and I will try and find someone.
John $Cash$ Locke
[addsig]
John,
Believe me, you're not demeaning in the least. All comments are very much appreciated. I actually have a strong marketing person on board, never thought of asking her to look at it. I'll start there.
As for heavy hitters on the board, I've already done that. One is a former VP of Imagineering at Disney (with considerable other experience). The rest have exceptional backgrounds as well. I know full and well I can't do everything (wouldn't want to even if I could). However, I know enough about almost everything (I do have a varied background) to effectively select and manage the real experts that do it. As for the conceptual drawings, we're currently working on those. We started with "words" describing everything and they're in the process of being converted into art.
I'll look into the blind pools, thanks for that tip. I've had my run-ins with the "send me money first" people already and I'm not that gullible. As I mentioned, I do have two leads for deep pockets as well that I'm following up on.
Thanks again!
Is there anyone more versed in creative real estate transactions that would at least be interested in helping with the acquisition negotiating?
Since no responses from my last post, let me try again. More specifically, any one with successful experience in negotiating creative commercial acquisitions needed. I think the funding issue is taken care of, so not looking for any equity participation (i.e. NO MONEY NEEDED). Obviously, if I'm not looking for your wallet, I'm going to be concentrating on your experience and negotiating skills. Legally, you'd probably have to be an employee or something, and we could work out compensation if you successfully negotiate this deal. If you've got the experience necessary to help get this project moving, please PM me.