Global Investment Manager Retains Zeidel & Associates to Negotiate $800 Million of Construction Contracts to Protect Its Interests

Situation

A leading global investment manager with approximately $35.6B in assets across more than 100 investments will purchase a minority equity interest in a ground-up hotel project partly funded by public bonds. The project had been in development for about 15 years but was stalled due to the pandemic, so there was an urgency when it resumed. It encompasses a 1,600-room resort, which is part of a larger project involving the transformation of vacant industrial land, with 275,000 square feet of meeting space, restaurants, a spa, a pool with a lazy river and adjacent public promenades.

Zeidel & Associates was retained to review the proposed drafts of $800 million in construction contracts. Given the high-profile nature of the project, our client asked us to review the documents to ensure they protected its interest. The developer, with whom they had previously worked, would be leading negotiations and handling the relationship with the contractor.

Approach

The documentation was complex, with separate construction agreements for the hotel, the parking structure, the convention center and site improvements. Zeidel & Associates needed to quickly synthesize provisions and structural concepts, including the public-private development documentation, ground leases and development agreements, etc., that had been discussed for years.

The firm then needed to address deficiencies that we determined were critical. We quickly realized that the developer and contractor had been negotiating the documents for some time and had reached understandings that were not always in our client’s favor. They also were pressuring us to simply sign off on the documents and not make waves.

Result

To protect our client’s investment, we convinced the developer and its attorneys (a large global law firm) to reopen negotiations so we could improve the owner’s position in the documents and thereby protect all the investors. This was a difficult process, but the firm succeeded in renegotiating the contracts with language that vastly improved protections for the investors, and the transaction closed in May 2022.