Case Studies.
The following case studies represent a synergistic and successful collaboration between the partners of Triton Hospitality Group during the last cycle.
Case Study
Hotel MdR
Overview
Market:
Marina del Rey, CA
Acquisition Date:
March 2013
Keys:
283
Brand:
Courtyard by Marriott
Lender:
Starwood/Wells Fargo
T-12 NOI at Acquisition:
$3.8MM
Photos at Acquisition (Before)
Opportunity
- Under improved and undermanaged Courtyard by Marriott with reflagging/repositioning opportunity
- Dynamic west LA neighborhood was experiencing a re-birth
- Limited buyer pool given age of asset, lack of obvious reflagging choice and unfamiliar submarket
- Attractive cost basis and at a significant discount to replacement cost
Execution
- Engaged broker and oversaw sale process of asset in 2018 to foreign buyer
- Designed and oversaw a full public area renovation (exterior, lobby, F&B and pool) to cement the desired repositioning, capturing the maximum rate premium
- Replaced management in order to realize upside through operations
- Negotiated a refinance with existing senior lender (Wells Fargo) to take out mezz financing, lower cost of debt and returning all remaining equity in the transaction
Results
Renovation Complete:
2014
Hotel Stabilized:
2015
Refinanced:
2015
Date of Disposition:
2018
T-12 NOI at Disposition:
$8.5 MM
Sales Price:
$128 MM
Deal IRR:
43.9%
EQM:
4.39x
Case Study
The Anza Hotel
Overview
Market:
Calabasas, CA
Acquisition Date:
July 2012
Keys:
122
Brand:
Country Inn & Suites
Lender:
Lowe Ent / Wells Fargo
T-12 NOI at Acquisition:
NA
Photos at Acquisition (Before)
Opportunity
- REO select service hotel in need of renovation and repositioning with brand and management available
- Attractive basis at substantial discount to replacement cost
- Affluent submarket with high barriers to entry for any new supply
Execution
- Planned and oversaw a transformational full renovation of all rooms and common areas
- Hired preferred management company to help re-launch new product offering and employ best-in-class sales, revenue management and cost management
- Negotiated refinance of asset at stabilization, which substantially lowered cost of debt and allowed for return of majority of investor equity
- Engaged and oversaw broker to sell asset once asset was stabilized; Sale closed in 2016
Results
Renovation Complete:
2013
Hotel Stabilized:
2014
Refinanced:
2015
Date of Disposition:
2016
T-12 NOI at Disposition:
$2.58 MM
Sales Price:
$30.6 MM
Deal IRR:
33.0%
EQM:
2.22x
Case Study
DoubleTree LAX
Overview
Market:
El Segundo, CA
Acquisition Date:
February 2014
Keys:
215
Brand:
Doubletree by Hilton
Lender:
Bancorp (CMBS)
T-12 NOI at Acquisition:
$2.79 MM
Opportunity
- Unsophisticated seller of under-managed hotel, which was encumbered by unattractive CMBS debt which clouded the sale process
- Existing debt and inefficient process allowed opportunity to tie-up asset for 6+ months in order to conduct DD and assume the loan
- Falling interest rates & aggressive debt markets during contingency period created an opportunity to defease existing debt
- Cap rates fell and NOI grew during contingency period creating a materially “in the money” buy with outsized current cash flow characteristics
Execution
- Negotiated a modest renovation (PIP) with Hilton
- Planned and oversaw in year one a renovation that focused on reconfiguring the public spaces
- Harvested strong cash yields to stabilization
- Engaged and oversaw broker to sell asset, which closed in 2017
Results
Renovation Complete:
2014
Hotel Stabilized:
2015
Refinanced:
NA
Date of Disposition:
2017
T-12 NOI at Disposition:
$4.5 MM
Sales Price:
$54 MM
Deal IRR:
38.0%
EQM:
2.70x
