Hotel Innvestor was contacted by a Chicago-based family office we’ve known for several years looking for additional joint-venture equity to consummate the acquisition of a pair of prototypical Courtyard Marriotts totaling 300 rooms, located in high growth markets in Alabama.

Hotel Innvestor reviewed the due diligence and realized both the Huntsville and Birmingham/Hoover markets have multiple demand generators, including nearby Cummings Research Park, the second largest research park in the United States and the fourth largest in the world.

The institutional seller was a Canadian company seeking to exit their entire US portfolio, which created complexity for the transaction because all 17 of their hotels were cross-collateralized in one debt instrument and needed to close simultaneously. The properties were being managed by an extremely large third-party management company, which presented the opportunity for operational efficiencies that could increase profitability. Both properties required a major renovation Property Improvement Plan (PIP) to remain with the Courtyard Marriott brand, but what was especially appealing about this transaction was that if our partnership agreed to extra renovations to the exterior of the entrance façade and porte-cochere to mirror the new Courtyard Marriott prototype specifications, we could secure a new 15-year license agreement with Marriott.

As the premier brand for business travelers, Courtyard Marriott is a perfect fit for the markets, but these properties also represented an opportunity to increase top-line and net revenue through extensive capital investment and greater management efficiencies. Because of the extensive renovations required to maintain the Marriott brand and the complexity of working with the seller to simultaneously close the 17 hotels all at once, our partnership was able to acquire these properties at a fraction of replacement cost with our basis being +/- $100,000 per room after the extensive renovations.

Hotel Innvestor was able to raise a substantial portion of the limited partner equity including direct investment from Hotel Innvestor to get the portfolio closed. This transaction is indicative of Hotel Innvestor’s ability to utilize its network built over decades in the hotel business to source, underwrite and consummate compelling hotel investments at an attractive risk-adjusted basis nationwide.