Primary Strategies
Operations Enhancement
Undermanaged hotels in good physical condition that will benefit from our rigorous approach to asset management and potentially changes to management and/or brand.
Renovation / Repositioning
Undercapitalized hotels in desirable locations that are failing to perform to their full potential due to a combination of their physical state and brand affiliation.
Adaptive Reuse
Underutilized buildings that are well located and suitable for conversion to hotels. These properties can often be acquired with limited competition, well below replacement cost, and are frequently eligible for public incentives.
Secondary Strategies
Preferred Equity / Debt
Select preferred equity, mezzanine debt, or note purchases for high-quality assets that fall within our typical investment targets and where our deep operational expertise makes us a preferred capital source.
New Development
Select ground-up development projects where supply and demand fundamentals support new construction and land can be purchased at a favorable price with entitlements already in place.
The Principles Guiding our Investments
We understand that lodging is a cyclical business, which is directly affected by the interplay of supply and demand and is highly correlated with overall economic growth. We therefore focus on more complex value-add investments that are less dependent on underlying market growth.
We focus on well located properties in high barrier to entry markets to further insulate against cyclical risk.
We acquire hotels at a meaningful discount to replacement cost in an effort to ensure that our all-in cost basis provides a solid foundation for value-creation. We will also seek to redevelop at a discount to replacement cost, buying underutilized buildings at a fraction of their cost and utilizing historic tax credits and other incentives to offset redevelopment costs.
We focus on opportunities with more upside than downside, with an underlying goal of capital preservation. We use scenario modeling to predict a range of potential outcomes and identify deals with positive long term capital growth prospects.
We seek deals with limited competition and we source the majority of our acquisitions directly. To the extent we compete in broadly brokered auctions, we pursue deals where our business plan and competitive advantages have the potential to create more value than those with whom we are competing.
We maintain a moderate leverage strategy and do not employ excessive debt (which creates excessive risk) to reach targeted returns. We target unlevered return hurdles consistent with risk and then derive targeted equity return hurdles based on leverage levels.
