Case Studies

Stay Hotels;
A Case Study
in Transaction Management
In Spring of 2007, Madison Title Agency handled the title work for the sale of the Extended Stay Hotel (ESH) chain. This $8 billion transaction, which included 684 hotels (76,000 units) in 44 states and Canada, was one of the largest non-casino hotel sales in U.S. history. The parties involved wanted to close in two months or less. Because of the size and geographic scope of the transaction, every major title underwriter was involved. This case study outlines the methods we used to manage the transaction.

Madison's President, Joseph I. Rosenbaum, explains,
"Our philosophy has always been to keep a strong infrastructure in place regardless of the fluctuations in the market. That way we are prepared to act when opportunities arise. And the wisdom of our philosophy was borne out here. We had the resources to handle this transaction, despite its scope and tight turnaround time."

As noted by Madison's Sam Shiel, Esq., who led the ESH team,
"Transactions involving nearly 700 sites that are spread across the country do not come often, but this one proved that whether you have a residential closing or an $8 billion purchase, Madison offers the highest quality service and expertise."

Experienced Title Team
Ten of Madison’s most experienced title officers were supported by 45 paralegals.

Custom-Built Website
Less than two days after being retained, Madison Title had built a customized website that was the key to managing this complex transaction. In addition to our own team, the buyer, seller, lenders and their representatives all had access to our system. In the post-closing phase, Madison used the website to track the mortgages as they were recorded, and to transfer tax payments and zoning letters. A few of the key features built into the site included:

Status Report – This listed all the properties by state & site number and allowed users to track when searches were ordered and completed; track commitments; and bring up relevant documents. It also showed the totals under each category, so users could see at a glance how many sites had been completed.
Master Issues – This spreadsheet listed all sites that had title issues and tracked their resolution.
Search Function – By selecting a document type (e.g., survey), users could pull up all documents of that type on file and sort them by date.
Closing Management – Deploying numerous closers, Madison orchestrated a smooth closing that took place over a four-day period and required the review of literally thousands of documents.
In the
While the ESH transaction was in progress, we also handled hundreds ofresidential closings and a number of large commercial deals, including:

A $131 million
purchase in

A 13-property
purchase in
New Jersey

A $13 million
construction purchase
in New Jersey

Towers I, II
and III in
Madison Title Insures Largest Dallas Real Estate Transaction
In 2008, the sale of Galleria Towers I, II and III at the corner of Interstate 635 and the Dallas North Tollway, was tagged 'The Biggest Sale of the Year' in the Dallas area. Built in the 1980s and early 1990s, the Galleria towers total 1.4 million square feet of space and range from 24 to 26 stories tall and adjoin a 1.9-acre tract of land in its Dallas Galleria mixed-use development, the Galleria shopping mall, as well as the Westin Galleria Hotel. The buildings are currently 98% occupied by such major tenants as Oryx Energy, Merrill Lynch, Smith Barney, General Electric Capital and Federal National Mortgage Association (FNMA).


The sale of the three landmark office buildings had an estimated value at more that $300 million and was insured by Madison Title Agency. That year, fewer buildings changed hands in Big D because of the lack of credit to finance big buys. The largest sale in North TX was the three-building Galleria office complex in Far North Dallas, according to Steven Brown, Texas columnist. It was a significant challenge to close the transaction given the tight credit markets.

This portfolio retained consistent investor interest right through the credit crunch and its closing sent a strong signal about the existing strength of the Dallas investment market for high quality office product, according to Jones Lang LaSalle Managing Director John Alvarado, which represented the seller, New York-based Fortis Property Group LLC.

Due to Madison Title's extensive experience, the client enjoyed a smooth, obstacle-free closing on two shopping centers in two different states as part of one transaction.

The client, a New York City-based real estate holding company, contacted Madison Title to handle the title and escrow for the purchase of two shopping centers. One property was a Fayetteville, GA shopping center with a purchase price of $19,475,000, and the other property was a Fern Park, FL shopping center with a purchase price of $6,473,000. The multi-state properties were part of one purchase.

The client had applied for a combined double mortgage of $20,700,000, which required the closing of both properties – in two different states -- simultaneously. To ensure a timely closing, every step of the title commitment had to be clarified and confirmed for both properties. The two-state transaction was complicated because title laws and requirements vary by state. In addition, Florida is notorious for its complicated and sometimes challenging title requirements.

A Multi-State Transaction
Purchase of these properties required a great deal of know-how. The client worked with a single point of contact at Madison in the acquisition of both properties. However, the client also benefited from Madison Title’s deep bench of expertise handling multi-state transactions. Its ability to handle deals in all 50 states was brought to bear in handling of this two-state transaction. The trained title officers at Madison Title inspected the records and documentation on the properties and then worked to resolve the issues affecting title.
Underwriting Requirements
The Florida property was undergoing renovations at the time of the purchase, which impacted the inspections and closing. According to Florida’s construction lien law, a contractor must file a Notice of Commencement when beginning any construction project. This notice offers the Contractor the right to their claim for payment against the property. Since the construction project was still ongoing, the Contractor’s Notice of Commencement would take priority over any mortgage filed at a later date.
In order to guarantee clear title to the property, Madison Title guided the client through the necessary steps. First, the client put a stop to the construction, had the Contractor file a Notice of Termination, and signed an Affidavit that his payments were up-to-date. Once the new mortgage was on record, the Contractor then filed a new Notice of Commencement with the client’s mortgage taking priority.
In this case, the underwriting requirements were extremely difficult to fulfill. However, thanks to Madison Title’s strong relationships with all the major underwriters nationwide, Madison’s title officers were able to identify an underwriter willing to accommodate the special circumstances of this transaction. As an added value, Madison Title’s team also acted as escrow agents, administering third-party disbursements for open balances, including tax payments, water and sewer payments, attorney fees and other charges.
Closing Expertise
As the closing agent, Madison’s team ensured that the documentation for each property was in order, and facilitated the mail away closing, which included tracking the signed documentation, handling all the wires and authorizations and recording the finalized documents. Throughout the process, the client was able to work with a single point of contact to coordinate every detail start to finish.
The Results The closing of both shopping centers was conducted on time without issue, resulting in significant savings based on the client’s mortgage agreement.