)URMI.
DECEMBER 2006
DGE Clo-srs HRsr i,lofircAsE roR ]loMElll,ooD
F Capital, LLC has closed a $10.5-million first mortgage
it tt it *ilt help develop a lOzt-r<iom Homewood SuitA
nd Heights, MO, according to RockBridgels managing
ames Merkel.
ded-stay property will be located in the Riverport Busi-
.which offers more than one million square feet of of-
ight-industrial space and is home to the HMB Bank Am-
rr and Harrah's Casino.'Ihe hotel is also within two
he 1 1.5-million-square.foot Earth City Business Park and
:. Charles and six miles west of 5t. Louis-Lambert lnter-
\irport.
building will contain studio, on+bedroom and
r-,story
oom suites, an indoor pool, an exercise room, a busi-
rr, a sundries shop and a sport court.
sponsor is 5t" Louis-based Equis Hospitality Manage'
ich was founded by the Mullenix family in 1964. Equis
manages four hotels in the 5t. Lbuis area and has
od Suites and Westin Hotel projecs under develop
Ichmond HeighB, MO.
AI{GES $234It'I FOR MASSAGIIIiETTS PROJECT
n office of Holliday Fenoglio Fowler. LP recently
a $23.21-million financing for the 28zt-room Renaisance
rich is situated on 23 acr6s in Bedford" MA.
has 13,000 square feet of meeting space, including
=rty
)omt a restaurant, a Starbuck, an indoor heated pool,
acility and four tennis courts.
r managing director Riaz Casum and director Anthony
orked on behalf of AEW Partners V LP to secure the
adjustable.rate loan through Merrill Lynch Capital.
is for the acquisition. renovation and rebranding of the
to a Doubletree Hotel.
3rty was acquired by AEW Partners V LE a real estate
ity fund managed by AEW Capital Management
r real estate investment management firm.
,TTAL PROVIDES $4.3M FOBUVIr I.IAMPTON INN
ital has originated a $4.3-million loan for the refinanc-
4-room Hampton lnn at 1781 Fleischli Parkway in
:,\MY.
ning-based borrower received a five-year, fixed-rate
I with a 25-year amortization at a 53% loan to value.
HOTEL JOIJRNAL
Be Wary 0f Ullhors Mining The Mint
1z n today's world, everyone
! lcrows that plastic is king.
I However, firll-service hotels
still engage in large numbers of
cash transactions, and in doing
so, very few asset managers and
ownerc review controls on the
cash that passes through their
hotels. Instead, they rely on both
the management company and
the large independent account-
ing firms, when engaged, to re-
view their case handling prac-
tices andpolicies.
The problem with leaving this
taskto the management compa-
ny is that, while they may main-
tain operating procedures in
hefty manuals, many hotels sim-
,
ply do not follow up or practice
these procedures. Furthermore,
accounting firms, despite em-
plolng associates educated in
accounting, employ few associ-
ates with meaningfi:l knowledge
of the hospitality business. Even
fewer know hotel operations.
This lack ofhotel operational ex-
perience leads to an incomplete
check and sometimes an inaccu-
rate audit. Consequently, in
order to maximize the value and
retum on ahotel investnent, itis
incumbent upon the properly
owner and/or asset manager to
ensure that cash is handled and
contolled cor:rectly.
The best placefor an auditor to
begin a rwiew of cash handling is
to start with the general cashier
and house banks. In the presence
of the general cashier, the audi-
tor should count the safe and
then detail t]le contents on a You should also document
count sheet. There should be a
The combination should be
recorded in a sealed opaque en-
velope signed on the flap by the
general cashier and maintained
bythe general manager. Dual ac-
cess should be required to enter
the safe in the event of an emer-
gency. It is critical that this area
remain secure at all times. The
auditor should verifr that all
house bank contacts are current
and maintained in asafelocation
with appropriate approvals. The
auditor should also verifl,the se-
curity of the bank contact for the
general cashier and confirm that
the general manager or con-
troller maintains it.
Verifz that all funds (safe,
house banks, etc.) total to the
general ledger and document the
procedures for the house bank
tant deterrent to theft. Ifa check
is used to give a guest cash, it is
likewise important to note the
check's use in the "memo" space
provided to make sure the guest
does not later become confused
about why he or she wrote the
check as well as to help deter-
mine if the checkwas written in
pariial payment of the guest's
porffolio.
Select at least five deposits
andhace the cash from the rev-
enue report to the bank This
exercise will help ensure that
deposits are going from the
property to the bank as expect-
ed and that there is no discrep
ancy between the revenue re-
port and the bank statement.
Document the maintenance
of foreign exchange rates, if
applicable. If foreign cunency
is exchanged or allowed to be
used at the property, ade-
quate controls need to be in
place to ensure that the cor-
rect exchange rate is always
used and that the lag time to
getting the currency to the
property's bank is minimized.
The auditor should review
the prior six months' bank
reconciliations and document
any items that appear more
than once a month. Investi-
gate any large or unusual rec-
onciling items. Verify out-
standing checklists and re-
view for stale-dated checks.
The auditor should also make
sure that the balances agree
with the general ledger.
the sesreqation ofduties related
 r tnanclng tor tne lu4-room Kenalssance
on 23 acres in Bedford, MA.
rsquare feet oJ meetirNg s"pace,rincluding
rant a starbucks, an,indoorrheated pool,
r tennis courts.
rector Ria;,Gassum and director: Anthony
alf of AE-W, Fartners V LP to secure the
te loan through Merrill Lynch Capital.
risition, reno-vation and rebranding of the
:e Hotel,
rred by AEW Partners V LE a real estate
qed by AEW Capital Mapqgement
vestrne-til management firm,
,
)ES 9LBM rOnUW. HAMPION]INN
atedi a'$4.3-million loan, for the refinanc-
lton lnn at 1781 Fleischli Parlaryay h ,
crrower received a five-year, fixed-rate
ar amortization at a 63'i/o loan to value.
i $5.5M FIOR TEXAS INN:AND'3UJIE9','
fuisors has arranged senior finqncing for
<sburg lnn and Suites in Frederickburg,
re $5.5-million, lGyear, fixed-rate loan
nmercial real estate lenderr' ' .
.; t ;i
rne hour from Austin and San Antonio
rs Capital Partners and managed by Hospi-
rp., which are both based in Dallas.
ormed ai$ 1,Z-million interior and,exterior,
rcrty, which was acquired two'yearqagp.
,es include two pools, a' sparand an out' ' i
eplace and grillinE'facilities,that are adja-
!.
rs, founded in 2003 by Danief Wenz and
wns hotql, of,fice and retail properties
i $1ll"6M FOR CONVERSION
has funded $10.5 million in floating-rate,
he acquisition of an AmeriSuites hotel in
rk Finance has also committed to provid-
rl $4 million, which will be funded within
r closing, for the hotelts renovation and:
Place hotel.
:Lean, VA, office, arranged the financing
Medford Hotel, LLC.
- STEFANI C. O'CONNOR
ates \!:ltn meanmgLu Knowreute
of the hospitality business. Even
fewer know hotel operations.
This lack ofhotel operational ex-
perience leads to an inmmplete
check and sometimes an inaccu-
rate audit. Consequently, in
order to maximize the value and
return on ahotel investrnent, itis
incumbent upon the properly
owner and/or asset manager to
ensure that cash is handled and
controlled correctly.
The best place for an auditor to
begin a review of cash handling is
to start with the general cashier
and house banks. In the presence
ofthe general cashier, the audi-
tor should count the safe and
then detail the contents on a
count sheet. There should be a
contract or similar documenta-
:
tion as to how much cash should
be in the safe at ail times. All
three amounts- conhact, safe
count and amount on the gener-
; alledger- should be consistent.
The house banks should then
be reviewed to provide the audi-
tor with a sense of how those
who actually handle cash treat
their respective banks.
. Thoughtfirlly select a represen-
tative number of house banks
and detail their contents on a
count sheet. Make sure to docu-
ment any petty cash, personal
checks and traveler's checks.
The total amount in the bank
should equal the amount the
cash handler signed for in order
to open his or her bank.
Security for both the count and
house bank areas should be re-
viewed and any security con-
cerns noted. The security of the
general cashier's office should
also be reviewed. Document the
security of the safe, including the
use of a "day lock' if applicable.
audits. While monthly audits by
other members of the manage-
ment team are recommended,
quarterly audits should be con-
ducted at a minimum. Safe au-
dits should be conducted weekly.
The change orderprocess should
be reviewed and documented as
well by verifuing that two em-
ployees are required in the
change order process. The Audi-
tor should also review bank rec-
onciliations for outstanding
change orders.
Verifythe use of a baffled drop
safe for deposits, including a de-
posit log. Check to see whether
dual entry is required to access
those deposits. Venfu that de-
posits are made daily.
Next, select and test six days'
transactions at random. Verifii
that all personal, business and
traveler's checks are restrictive-
ly endorsed upon receipt. This is
necessary to ensure that such
checks may only be deposited
into the hotel's depository ac-
count and serves as an impor-
quate controtJ neea i; b" t"
place to ensure that the cor-
rect exchange rate is always
used and that the lag time to
getting the currency to the
property's bank is minimized.
The auditor should review
the prior six months' bank
reconciliations and document
any items that appear more
than once a month. Investi-
gate any large or unusual rec-
onciling items. Verify out-
standing checklists and re-
view for stale-dated checks.
The auditor should also make
sure that the balances agree
with the general ledger.
You should also document
the segregation ofduties related
to cash, but the person prepar-
ing the bank deposit should not
maintain the cash receipts jour-
nal, maintain the A/P disburse-
ments joumal, possess signing
authority or prepare bank rec-
onciliations.
Naturally, this article does
not serve as either a complete
or comprehensive list of all
cash audit procedures owners
should follow at their proper-
ties. Rather, it should serve to
offer an overview of items
that owners should pay atten-
tion to in the course of creat-
ing and routinely auditing
proper cash handling proce-
dures. Adopting these and/or
other controls will go a long
way in ensuring that theft is
limited and a property is
more profitable.
Jeffrey Geuertz is the up of
finance at Atlanta-
based Tiuoli Properties. He
mlA be contacted at
j ggu em @ tiu oli-pr oPeft ies.com.