On Thursday, CrowdStreet Marketplace announced a new investment opportunity on its platform, which is dedicated to the Comfort Suites located in northern part of Savannah, Georgia.The property, which was built in 2006, has 83 rooms. The contract purchase price is $7,450,000 with an all in cost, including acquisition costs and reserves, totaling $7,925,000. It was revealed:
“The Sponsor will assume a Wells Fargo CMBS loan with a current mortgage balance of $5,680,000 amortized over a 30 year period at a 4.99% annual interest rate resulting in annual debt service of $373,203 and a Debt Service Coverage Ratio of 2.11 in year one.”
It was noted that the hotel has historically had reliable returns, with revenues increasing from $2,180,000 to $2,737,000 between 2013 and 2016 while average occupancy increased from 62.4% to 79.15%. The sponsor also listed key deal points, which are the following:
- Strategic joint venture: Marshall Dominion Hospitality (“MDH”) is a strategic joint venture of the principals of Marshall Hotels and Dominion Diversified that targets hotel assets throughout the Southeastern U.S. that face maturing debt coming due and Franchise required Property Improvement Plans (PIPs) that will not be met by the current ownership, resulting in pressured selling environments and opportunistic buying opportunities.
- Experienced operator: Marshall Hotels and Resorts, which comprises one half of the MDH joint venture, currently operates 56 hotels across 10 states that include both full service and limited-service hotels.
- High in-place cash flow: MDH is targeting average investor cash-on-cash returns of 14.0% over the five-year holding period.
- Recent capital expenditures: In 2016, the property underwent a substantial renovation of over $16,000 per key, which included a “Yours Truly” Choice renovation package and roof replacement.
- Conservative pro forma assumptions: MDH’s business plan contemplates growing room revenue by 2% annually and exiting at a 10% cap rate on year 5 net operating income.
Funds are due on September 7th and property closing date is October 1st, distribution commencement being January 1, 2018.