[sheet: Cover & Summary]
Field | Value
Transaction | Redemption of Meridian Shores Hospitality LLC's 35% Membership Interest in Palmetto Grand Ventures LLC
Joint Venture Entity | Palmetto Grand Ventures LLC (FL LLC, Filing No. L17000124583, EIN 82-5063921)
Purchaser | Pellegrino Capital Group LLC (FL LLC, EIN 83-2147605)
Purchaser Address | 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606
Seller | Meridian Shores Hospitality LLC (DE LLC, EIN 84-3298174)
Seller Address | 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480
Underlying Property | The Palmetto Grand Resort & Spa, 650 Mandalay Avenue, Clearwater Beach, FL 33767
Redemption Price | $52,850,000.00
Payment Method | Lump sum wire transfer
Closing Date | June 28, 2024
Arbitration Reference | JAMS Ref. No. 1440032871
Arbitration Dismissal Date | August 9, 2024
Original Operating Agreement Date | June 15, 2017
Amended & Restated OA Date | July 15, 2024
PCG Counsel | Calderwood & Harkness LLP (Francesca Morano, Partner) — Matter No. 1027-00003
MSH Counsel | Hargrove, Dunlap & Castillo LLP (Victoria Castillo, Partner)
Lender | Gulf Atlantic National Bank (Loan No. CRE-2017-06284)
Prepared By | Jeffrey Park, Calderwood & Harkness LLP
Binder Date | August 2024
[sheet: Closing Checklist]
Tab No. | Category | Document Title | Description / Notes | Responsible Party | Signatory / Certifying Officer | Target Date | Actual Date Executed / Delivered | Status | Original / Copy / Conformed | Binder Location
1.1 | A. Transaction Agreements | Redemption Agreement | Definitive agreement for purchase of MSH's 35% membership interest in PGV at $52,850,000; includes representations, warranties, covenants, conditions to closing, and indemnification provisions; governed by Florida law | PCG / MSH | Dominic R. Pellegrino (PCG) / Nathaniel Cordero (MSH) | 2024-05-20 | 2024-05-20 | Complete | Original (2 counterparts) | Tab 1.1
1.2 | A. Transaction Agreements | Mutual Release and Settlement Agreement | Full and final mutual release of all claims, counterclaims, and causes of action arising out of or relating to the Operating Agreement, the call-option exercise, and JAMS Ref. No. 1440032871; each party bears its own fees and costs | PCG / MSH | Dominic R. Pellegrino, Nathaniel Cordero, Elena Cordero | 2024-05-20 | 2024-05-20 | Complete | Original (2 counterparts) | Tab 1.2
1.3 | A. Transaction Agreements | Term Sheet (Executed) | Binding term sheet setting forth principal terms: $52,850,000 redemption price, lump sum closing, mutual release, dismissal with prejudice, each party bearing own fees/costs | PCG / MSH | Dominic R. Pellegrino / Nathaniel Cordero | 2024-04-08 | 2024-04-08 | Complete | Original | Tab 1.3
2.1 | B. Assignment & Ownership Transfer | Assignment of Membership Interest — MSH to PCG | Instrument of assignment transferring MSH's 35% membership interest in PGV to PCG, free and clear of all liens and encumbrances | MSH | Nathaniel Cordero (Managing Member, MSH) | 2024-06-28 | 2024-06-28 | Complete | Original | Tab 2.1
2.2 | B. Assignment & Ownership Transfer | Amended and Restated Operating Agreement of Palmetto Grand Ventures LLC | Reflects PCG as sole (100%) member and manager of PGV following redemption; supersedes original OA dated June 15, 2017; governed by Florida law | PCG | Dominic R. Pellegrino (Managing Member, PCG) | 2024-07-15 | 2024-07-15 | Complete | Original | Tab 2.2
3.1 | C. Closing Certificates | Closing Certificate — Pellegrino Capital Group LLC | Officer's certificate certifying accuracy of PCG's representations and warranties, satisfaction of closing conditions, and authorization of the redemption transaction | PCG | Marcus Thiel, CFO | 2024-06-28 | 2024-06-28 | Complete | Original | Tab 3.1
3.2 | C. Closing Certificates | Closing Certificate — Meridian Shores Hospitality LLC | Officer's certificate certifying accuracy of MSH's representations and warranties and satisfaction of closing conditions under the Redemption Agreement | MSH | Nathaniel Cordero, Managing Member | 2024-06-28 | 2024-06-28 | Complete | Original | Tab 3.2
4.1 | D. Lender Consent & Financing | Lender Consent Letter — Gulf Atlantic National Bank | GANB consent to transfer of MSH's 35% interest in PGV to PCG and approval of $30,850,000 incremental draw on PGV revolving credit facility (Loan No. CRE-2017-06284); total PGV debt post-draw: $79,450,000 ($48,600,000 existing + $30,850,000 incremental) | GANB | Christine Delacroix, SVP, Commercial Real Estate | 2024-06-28 | 2024-06-25 | Complete | Original | Tab 4.1
4.2 | D. Lender Consent & Financing | Wire Transfer Confirmation — Redemption Price ($52,850,000) | Confirmation of lump sum wire transfer of $52,850,000 from PCG to MSH at closing; funded from PCG liquidity ($22,000,000) and PGV revolver draw ($30,850,000) | PCG | Marcus Thiel, CFO | 2024-06-28 | 2024-06-28 | Complete | Copy (bank confirmation) | Tab 4.2
4.3 | D. Lender Consent & Financing | Revolver Draw Request — PGV to Gulf Atlantic National Bank | Request for $30,850,000 incremental draw under existing revolving credit facility (Loan No. CRE-2017-06284, SOFR + 2.25%, maturing August 1, 2027) | PGV / PCG | Marcus Thiel, CFO (as authorized officer of PGV manager) | 2024-06-28 | 2024-06-28 | Complete | Copy | Tab 4.3
5.1 | E. Arbitration Dismissal | Joint Stipulation of Dismissal with Prejudice | Joint stipulation filed with JAMS dismissing JAMS Ref. No. 1440032871 with prejudice; each party bearing own costs and fees | PCG / MSH | Francesca Morano (C&H) / Victoria Castillo (Hargrove Dunlap) | 2024-08-09 | 2024-08-09 | Complete | Conformed copy | Tab 5.1
5.2 | E. Arbitration Dismissal | JAMS Confirmation of Dismissal / Case Closure | Written confirmation from JAMS that Ref. No. 1440032871 is closed | JAMS | N/A | 2024-08-09 | 2024-08-09 | Complete | Copy | Tab 5.2
6.1 | F. Entity & Authority Documents — PCG | Certificate of Good Standing — Pellegrino Capital Group LLC (Florida) | Current certificate of good standing from Florida Secretary of State | PCG | N/A (state-issued) | 2024-06-28 | 2024-06-20 | Complete | Original | Tab 6.1
6.2 | F. Entity & Authority Documents — PCG | PCG Managing Member Resolution Authorizing Redemption | Written consent of Dominic R. Pellegrino as sole Managing Member of PCG authorizing execution and performance of the Redemption Agreement and related documents | PCG | Dominic R. Pellegrino | 2024-05-15 | 2024-05-15 | Complete | Original | Tab 6.2
6.3 | F. Entity & Authority Documents — PCG | Certificate of Formation — Pellegrino Capital Group LLC | Copy of PCG's certificate of formation filed with the Florida Secretary of State | PCG | N/A | N/A | N/A | Complete | Copy | Tab 6.3
7.1 | G. Entity & Authority Documents — MSH | Certificate of Good Standing — Meridian Shores Hospitality LLC (Delaware) | Current certificate of good standing from Delaware Secretary of State | MSH | N/A (state-issued) | 2024-06-28 | 2024-06-18 | Complete | Original | Tab 7.1
7.2 | G. Entity & Authority Documents — MSH | Certificate of Authorization to Transact Business — MSH (Florida) | Foreign LLC qualification in Florida | MSH | N/A (state-issued) | N/A | N/A | Complete | Copy | Tab 7.2
7.3 | G. Entity & Authority Documents — MSH | MSH Member Consent Authorizing Redemption | Written consent of Nathaniel Cordero and Elena Cordero as members of MSH authorizing execution of Redemption Agreement and related documents | MSH | Nathaniel Cordero / Elena Cordero | 2024-05-18 | 2024-05-18 | Complete | Original | Tab 7.3
7.4 | G. Entity & Authority Documents — MSH | Certificate of Formation — Meridian Shores Hospitality LLC (Delaware) | Copy of MSH's certificate of formation filed with the Delaware Secretary of State | MSH | N/A | N/A | N/A | Complete | Copy | Tab 7.4
8.1 | H. Background / Reference Documents | Operating Agreement of Palmetto Grand Ventures LLC (Original, dated June 15, 2017) | Original JV operating agreement; PCG 65% / MSH 35%; includes call option (Section 12.4), bad-faith penalty (Section 12.7), CapEx obligations (Section 8.3), dispute resolution (Section 15.2) | Reference | N/A | 2017-06-15 | 2017-06-15 | Complete | Copy | Tab 8.1
8.2 | H. Background / Reference Documents | Call-Option Exercise Notice (January 9, 2023) | PCG's written notice exercising the call option under OA Section 12.4 to purchase MSH's 35% interest | Reference | N/A | 2023-01-09 | 2023-01-09 | Complete | Copy | Tab 8.2
8.3 | H. Background / Reference Documents | Whitfield Realty Advisors Appraisal Report (February 10, 2023) | PCG's appraisal; FMV of 100% of JV assets: $118,000,000 (cap rate 9.5%, DCF discount rate 10.75%); valuation date December 31, 2022 | Reference | Gerald K. Whitfield, MAI | 2023-02-10 | 2023-02-10 | Complete | Copy | Tab 8.3
8.4 | H. Background / Reference Documents | Beacon Valuation Group Appraisal Report (April 14, 2023) | MSH's appraisal; FMV of 100% of JV assets: $151,500,000 (DCF discount rate 8.5%, terminal cap rate 7.75%); valuation date December 31, 2022 | Reference | Dr. Priya Ramanathan, CFA, ASA | 2023-04-14 | 2023-04-14 | Complete | Copy | Tab 8.4
8.5 | H. Background / Reference Documents | Linden Park Advisory Preliminary Indication of Value (July 14, 2023) | Neutral appraiser preliminary range: $130,000,000–$138,000,000 for 100% of JV assets; valuation date December 31, 2022; formal report never finalized due to settlement | Reference | Thomas Carraway, MAI, FRICS | 2023-07-14 | 2023-07-14 | Complete | Copy | Tab 8.5
8.6 | H. Background / Reference Documents | GANB Loan Agreement (August 1, 2017) | Original loan agreement; Loan No. CRE-2017-06284; $61,250,000 (70% LTV); SOFR + 2.25% (converted from LIBOR 2022); maturing August 1, 2027; outstanding balance as of Dec 31, 2022: $48,600,000 | Reference | N/A | 2017-08-01 | 2017-08-01 | Complete | Copy | Tab 8.6
8.7 | H. Background / Reference Documents | Aurelian Hotels & Resorts Franchise Agreement (July 15, 2017) | 20-year franchise agreement (expires July 14, 2037); franchise fee 5% of gross room revenue + 2% marketing fund contribution | Reference | N/A | 2017-07-15 | 2017-07-15 | Complete | Copy | Tab 8.7
8.8 | H. Background / Reference Documents | Atlantic Omnivrel Insurance Company — Managers' Liability Policy | Policy No. AFML-2022-08745; $10,000,000 per occurrence / $10,000,000 aggregate; D&O / manager's liability coverage; insurer funded $625,000 toward defense costs under reservation of rights | Reference | N/A | N/A | N/A | Complete | Copy | Tab 8.8
9.1 | I. Settlement Funding Reconciliation | Redemption Price Funds Flow Memorandum | Summary of sources and uses: $22,000,000 PCG liquidity + $30,850,000 PGV revolver draw = $52,850,000 to MSH; post-closing PGV total debt: $79,450,000 | PCG | Marcus Thiel, CFO | 2024-06-28 | 2024-06-28 | Complete | Original | Tab 9.1
[sheet: Redemption Price Derivation]
Line Item | Whitfield (PCG Appraiser) | Beacon (MSH Appraiser) | Linden Park Midpoint (Neutral) | Settlement Basis | Notes
Gross Asset Value (100% of JV) | $118,000,000 | $151,500,000 | $134,000,000 | $134,000,000 | Linden Park range: $130.0M–$138.0M; midpoint used for settlement reference
Less: Outstanding Debt (GANB Loan No. CRE-2017-06284) | ($48,600,000) | ($48,600,000) | ($48,600,000) | ($48,600,000) | Balance as of December 31, 2022
JV Net Equity Value | $69,400,000 | $102,900,000 | $85,400,000 | $85,400,000 | Gross asset value less debt
MSH's 35% Equity Share | $24,290,000 | $36,015,000 | $29,890,000 | $29,890,000 | Net equity × 35%
Plus: MSH Accrued Preferred Return | $17,010,000 | $17,010,000 | $17,010,000 | $17,010,000 | 8% compounding on $18,505,000 capital; stipulated by parties
Subtotal (Equity + Preferred) | $41,300,000 | $53,025,000 | $46,900,000 | $46,900,000 | PCG tender: $41.3M; rejected by MSH March 10, 2023
Plus: Bad-Faith Penalty (OA §12.7) — MSH Claim | N/A | $16,975,000 | N/A | $0 | MSH claimed 32% adjustment; withdrawn as part of settlement
Plus: Negotiated Premium (Litigation Risk / Acceleration) | N/A | N/A | N/A | $5,950,000 | $52,850,000 − $46,900,000; reflects litigation-risk discount on bad-faith claim
Total Buyout / Redemption Price | $41,300,000 | $70,000,000 | $46,900,000 | $52,850,000 | Settlement closed June 28, 2024; gap closed: $28,700,000 → $0
Appraisal Divergence (Whitfield vs. Beacon) | 28.4% | ($151.5M − $118.0M) / $118.0M; exceeded 10% threshold triggering third appraiser
[sheet: Funds Flow Summary]
Line Item | Amount | Notes
SOURCES
PCG Available Liquidity (Cash) | $22,000,000 | Funded from PCG's existing cash reserves
PGV Revolving Credit Facility — Incremental Draw (GANB) | $30,850,000 | Approved per Lender Consent Letter; Loan No. CRE-2017-06284; SOFR + 2.25%
Total Sources | $52,850,000 | = $22,000,000 + $30,850,000
USES
Redemption Payment to Meridian Shores Hospitality LLC | $52,850,000 | Wire transfer to MSH, June 28, 2024; lump sum per Redemption Agreement
Total Uses | $52,850,000
POST-CLOSING DEBT SUMMARY
Pre-Closing PGV Debt (GANB Outstanding Balance, Dec 31, 2022) | $48,600,000 | Amortized from original $61,250,000 (August 2017)
Incremental Revolver Draw | $30,850,000 | Drawn at closing for redemption funding
Post-Closing PGV Total Debt | $79,450,000 | $48,600,000 + $30,850,000; subsequently refinanced
Loan Maturity Date | August 1, 2027 | Original 10-year term
[sheet: Key Dates & Timeline]
Date | Event | Reference / Document
2017-06-15 | PGV Operating Agreement executed; PCG 65% / MSH 35% | Tab 8.1
2017-07-15 | Aurelian Hotels & Resorts franchise agreement executed (20-year term) | Tab 8.7
2017-08-01 | PGV acquires The Palmetto Grand Resort & Spa for $87,500,000; GANB loan of $61,250,000 funded | Tab 8.6
2017–2019 | Renovation of hotel property — $24,300,000 invested (PCG $15,795,000 / MSH $8,505,000) | —
2022-06-15 | Fifth anniversary of OA; call option under Section 12.4 becomes exercisable | —
2022-12-31 | Valuation date for all appraisals | —
2023-01-09 | PCG delivers call-option exercise notice to MSH | Tab 8.2
2023-02-10 | Whitfield appraisal completed — FMV $118,000,000 | Tab 8.3
2023-03-01 | PCG tenders $41,300,000 to MSH | —
2023-03-10 | MSH rejects tender | —
2023-03-20 | Meridian files JAMS Demand for Arbitration (Ref. No. 1440032871) | —
2023-03-22 | Calderwood & Harkness engagement letter (Matter No. 1027-00003) | —
2023-04-05 | PCG files Response and Counterclaim | —
2023-04-14 | Beacon appraisal completed — FMV $151,500,000 | Tab 8.4
2023-04-28 | Arbitrator Hon. Margaret Liu Chen (Ret.) appointed | —
2023-05-15 | Preliminary arbitration conference | —
2023-06-01 | Linden Park Advisory retained as neutral appraiser | —
2023-07-14 | Linden Park preliminary indication of value: $130.0M–$138.0M | Tab 8.5
2023-08-22 | Document production deadline | —
2023-09-18 | Expert depositions (Gerald K. Whitfield; Dr. Priya Ramanathan) | —
2023-10-10 | Party depositions (Dominic R. Pellegrino; Nathaniel Cordero) | —
2023-11-06 | MSH files motion to compel production of PCG investment-committee memos | —
2023-11-30 | Motion to compel partially granted | —
2024-01-15 | Parties agree to mediation with Raymond Alcazar | —
2024-02-12 | First mediation session (no resolution) | —
2024-03-25 | Second mediation session; framework agreement reached at $52,850,000 | —
2024-04-08 | Term sheet executed | Tab 1.3
2024-05-15 | PCG Managing Member resolution authorizing redemption executed | Tab 6.2
2024-05-18 | MSH member consent authorizing redemption executed | Tab 7.3
2024-05-20 | Definitive Redemption Agreement and Mutual Release executed | Tabs 1.1, 1.2
2024-06-25 | GANB Lender Consent Letter delivered | Tab 4.1
2024-06-28 | Closing: $52,850,000 paid; Assignment of Membership Interest and Closing Certificates delivered | Tabs 2.1, 3.1, 3.2, 4.2
2024-07-15 | Amended and Restated Operating Agreement executed (PCG 100% owner) | Tab 2.2
2024-08-09 | Joint Stipulation of Dismissal with Prejudice filed; JAMS case closed | Tabs 5.1, 5.2
[sheet: Parties & Contacts]
Role | Entity / Firm Name | Contact Person | Title | Address | Reference / ID
Purchaser / Respondent | Pellegrino Capital Group LLC | Dominic R. Pellegrino | Managing Member | 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606 | EIN: 83-2147605
Purchaser — CFO | Pellegrino Capital Group LLC | Marcus Thiel | Chief Financial Officer | 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606
Purchaser — SVP Investments | Pellegrino Capital Group LLC | Adriana Pellegrino-Voss | SVP of Investments | 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606
Seller / Claimant | Meridian Shores Hospitality LLC | Nathaniel Cordero | Managing Member | 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480 | EIN: 84-3298174
Seller — Member | Meridian Shores Hospitality LLC | Elena Cordero | Member (40% owner of MSH) | 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480
Joint Venture Entity | Palmetto Grand Ventures LLC | Dominic R. Pellegrino (as Manager) | Manager | 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606 | EIN: 82-5063921; FL Filing No. L17000124583
PCG Counsel — Responsible Partner | Calderwood & Harkness LLP | Francesca Morano | Responsible Partner | 801 Brickell Avenue, Suite 2800, Miami, FL 33131 | Matter No. 1027-00003
PCG Counsel — Billing Partner | Calderwood & Harkness LLP | Samuel Eklund | Billing Partner | 801 Brickell Avenue, Suite 2800, Miami, FL 33131
PCG Counsel — Lead Associate | Calderwood & Harkness LLP | Simone Laroche | Lead Associate | 801 Brickell Avenue, Suite 2800, Miami, FL 33131
PCG Counsel — Working Associate | Calderwood & Harkness LLP | Jeffrey Park | Working Associate | 801 Brickell Avenue, Suite 2800, Miami, FL 33131
MSH Counsel — Partner | Hargrove, Dunlap & Castillo LLP | Victoria Castillo | Partner | 1395 Brickell Avenue, Suite 3100, Miami, FL 33131
MSH Counsel — Senior Associate | Hargrove, Dunlap & Castillo LLP | Ryan Matsuda | Senior Associate | 1395 Brickell Avenue, Suite 3100, Miami, FL 33131
Lender | Gulf Atlantic National Bank | Christine Delacroix | SVP, Commercial Real Estate | 201 East Pine Street, Orlando, FL 32801 | Loan No. CRE-2017-06284
PCG Appraiser | Whitfield Realty Advisors LLC | Gerald K. Whitfield, MAI | Lead Appraiser | 500 East Broward Boulevard, Suite 900, Fort Lauderdale, FL 33394 | FMV: $118,000,000
MSH Appraiser | Beacon Valuation Group Inc. | Dr. Priya Ramanathan, CFA, ASA | Lead Appraiser | 2600 South Bayshore Drive, Suite 1050, Miami, FL 33133 | FMV: $151,500,000
Neutral Appraiser | Linden Park Advisory LLC | Thomas Carraway, MAI, FRICS | Lead Appraiser | 100 Southeast Second Street, Suite 3600, Miami, FL 33131 | Range: $130.0M–$138.0M
Hotel Franchisor | Aurelian Hotels & Resorts Inc. | — | — | — | Franchise Agreement dated July 15, 2017
PCG Accountants | Grantham, Pryce & Associates CPAs | Howard Grantham, CPA | Lead Partner | 4221 West Boy Scout Boulevard, Suite 600, Tampa, FL 33607
Manager's Liability Insurer | Atlantic Omnivrel Insurance Company | — | — | — | Policy No. AFML-2022-08745; $10M per occ./$10M agg.
Arbitrator | JAMS | Hon. Margaret Liu Chen (Ret.) | Arbitrator | 1 Independent Drive, Suite 1600, Jacksonville, FL 32202 | JAMS Ref. No. 1440032871
Mediator | Alcazar Dispute Resolution LLC | Raymond Alcazar | Mediator | 333 SE 2nd Avenue, Suite 2100, Miami, FL 33131
Registered Agent — PCG | CT Agents of Florida LLC | — | — | 1201 Hays Street, Tallahassee, FL 32301