Beachfront Hospitality Assemblage

Transcription

1 Beachfront Hospitality Assemblage 186-Unit Holiday Inn Branded Hotel & 24 Unit Oceanfront Resort 16.5 million

2 Executive Summary INTRODUCTION The subject property is a full-service, 186-key Holiday Inn hotel located just North of Ft. Lauderdale in the charming seaside town of Lauderdale by the Sea. It has a room mix of 40 king rooms and 146 double full-size beds. The hotel is 5 stories and has ocean views from 88 guest rooms, of which 39 have kitchenettes. The food and beverage facilities include a dining room that seats 100 and a poolside patio bar with seating for 75. The hotel features a private beach access for its guests in addition to other traditional amenities. The property is a well-known landmark hotel offering mid-scale rate value. It is also the only flagged hotel in the beach in the area. The property has not benefited from any significant capital investment over the past 10 years, leaving it in need of a complete renovation. This has also made it difficult for the hotel to increase rate and occupancy to keep up with a hotel market that has seen above average growth in both categories (occupancy and ADR). Nonetheless, you will see from the historical figures that there has been a significant increase in ADR despite the disrepair, indicating a demand pressures for this type of product. The following information will demonstrate that this hotel will provide a hotel developer/group with a tremendous opportunity to upgrade, renovate, and reposition the asset into a successful hospitality leader competing in a protected environment against boutique hotels that are reaching the end of their useful life spans. SOUTH FLORIDA South Florida is truly a subtropical paradise filled with palm trees, sunshine, and beaches. It s not surprising that people from all over the world have flocked to call this area home. The diversity of both residents and visitors contributes to the both exciting and opportunistic environment that truly separates it from the rest of the United States. The area holds the wellknown cities of Miami, Fort Lauderdale, and West Palm Beach, communities where many actors, singers, athletes, and other celebrities reside. Considered a vacation paradise, instability in many South and Central American countries have empowered the South Florida area to become a banking, insurance, and tourism center for those regions. This has also led to comfort for European travelers who enjoy the cultural diversity. Northeastern and Midwest travelers have also flocked to South Florida for events, business, and vacation for many years. LAUDERDALE BY THE SEA Lauderdale by the Sea is a destination located east of Fort Lauderdale, between the intracoastal waterway and the Atlantic Ocean. Originally developed in the 1950 s and 1960 s generations of families have grown to make this relaxing beach town their annual vacation destination. Much of the visitors coming from the Northern U.S. and Canada in winter months and South America during the summer months give the area an exciting diversity with yearround tourists. The center of this Key West style town is marked by the Anglin s Pier, which provides a fishing spot for both locals and visitors alike. Lauderdale by the Sea is known as the shore diving

3 capital of the United States boasting several tiers of north-south reefs under no more than 18 feet of clear blue ocean water. The beach is lined with old-style hotels about.5 miles to the north and south of Anglin s Pier. This hotel district is the focus of the community attracting beachwear retailers, restaurants and bars to cater to the visitor needs. The town is one of the only remaining areas where high-rise development is not permitted, creating a different old Florida atmosphere. Additional commercial services can be found just west of the town s center on Commercial Boulevard and both north and south on A1A. Lauderdale by the Sea is found a short drive from Miami Beach to the south and West Palm Beach to the north. For a tourist looking to experience all that South Florida has to offer, this town is a great midpoint destination to return to after an exciting day attending the many attractions or a crazy night experiencing the well-known bars and clubs. THE OPPORTUNITY The Holiday Inn Hotel in Lauderdale by the Sea is an extraordinary opportunity for a valueadded investor looking to capitalize in this current market. Originally set for purchase in 2005, the Holiday Inn was to be demolished and replaced with a luxury condo-hotel. As the market turned and the project was no longer feasible, the plans were put on hold and focus was placed on the current asset. Neglected by former ownership, the building was in need of the renovation that is currently underway. While current renovations have begun to increase customer satisfaction and give the hotel a new look and feel, the building is in need of an overhaul that will allow 30 50% increased rates that will dramatically boost the profitability and value of the building (see projections for details). The elasticity in price is largely evident due to the lack of middle-market, flagged hotels within walking distance to the beach in Broward County. The explosion of the South Florida real estate market from 2003 through early 2006 brought the demolition of many hotels in the area to be replaced with high-end condos, townhouses, and hotels. The beach area of Broward is now mainly composed of small mom and pop motels, residences, high-end hotels, and ultra-luxury condo-hotels, such as the W, Trump, Hilton Q-Club, and St. Regis. The loss of approximately 1,500 rooms creates the opportunity to control the midscale hotel market. What also makes this opportunity unique is the high barrier to entry in the midscale hotel market. Soaring land prices have made it virtually impossible to develop anything other than luxury. At the same time, a massive reduction in construction activity has created a shortage in contractor work, reducing construction costs significantly. Where in the past there were 4 jobs competing for a single contractor, there are now 4 contractors competing for your job. In conjunction with rate and occupancy increases there are other avenues that can improve the cash flow of the hotel. Both the management and the franchise agreements are short term. All aspects together create a dynamic and profitable opportunity for a visionary investor focused on current returns coupled with the large future upside.

4 VILLA CAPRICE The Villa Caprice Oceanfront Resort is a 24 unit beachfront all suites hotel that features a beautiful grass lawn spanning most of the 300 feet of private oceanfront property. The rooms range from SF apartment suites with balconies to typical hotel rooms. Rates range from 99 per night to 425 per night in the high season for the largest room. The Villa Caprice adds flexibility and allure to the assemblage. Clearly not its highest and best use, the property is currently operational and in excellent condition. The property can be maintained as an independent oceanfront resort or as the oceanfront portion of a larger resort including the Holiday Inn if we were to eliminate the franchise. In the future, the property can also be redeveloped into a minimum 80 unit all suites hotel, fractional residences, timeshare, or 40 unit residential condo project, depending on the plan. The height is limited to 4 floors and the zoning is in place.

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7 VILLAS OF CAPRICE ASSEMBLAGE VILLA CAPRICE RESORT & RESIDENCES HOTEL FINANCING Year Hotel Rooms 220 HOLIDAY INN Land Allocation 33,500,000 Hotel Rooms Total Hard Costs 2,750,000 ADR Total A&D Costs 1,000,000 Occupancy 69% 75% 75% 76% Total Cost 37,250,000 RevPar Cost / Key 169,318 Total Revenues 5,232,213 6,274,104 7,205,093 7,748,732 Equity 10,384,811 Total Expenses 4,055,954 4,700,007 4,558,613 4,889,375 Debt (Perm) 26,865,189 Hotel NOI 1,176,259 1,574,098 2,646,480 2,859,357 Loan to Cost 72.1% Interest Rate 6.7% VILLA CAPRICE Hotel Rooms ADR Terminal CAP Value 7.5% Occupancy 73% 73% 76% 74% RevPar Total Revenues 1,058,090 1,186,438 1,260,451 1,272,626 Total Expenses 652, , , ,195 Hotel NOI 405, , , ,431 A1A ATALANTIC Hotel Rooms ADR Occupancy 90% 70% 75% 75% RevPar Total Revenues 82, , , ,625 Total Expenses 30,000 35,000 35,000 40,000 Hotel NOI 52,125 92, , ,625 Combined NOI 1,634,158 2,189,591 3,366,486 3,611,413 Debt - VC 1,080,000 1,080,000 1,080,000 1,080,000 Debt HI 693, , , ,000 Debt A1A 95,700 95,700 95,700 95,700 Total Debt 1,868,700 1,868,700 1,868,700 1,868,700 Cash Flow (234,542) 320,891 1,497,786 1,742,713 ROI -2% 3% 14% 17% DSCR STABALIZED HOTEL SALE (YEAR 4) Terminal Value Less Debt Less Sales Costs Net Sales Proceeds Total Cash Throw-off Gross Proceeds Return of Equity Net Cash Return 48,152,176.2 (26,865,189) (2,407,608.81) 18,879,378 3,326,848 22,206,226 10,384,811 11,821,415

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10 HOLIDAY INN IMPROVEMENT LIST List of recent improvements made to Holiday Inn Hotel, LBTS, FL since August 1, 2007 Task Name Cost Notes EXTERIOR Professionally Landscaped 8,880 Plants & Re planting Mulch Fountains Tree Trimming Stump Grinding Exterior Paint 79,000 Full Exterior Re paint Exterior doors Exterior Stairwells Exterior Carpet 11,530 Replace carpet with Texture Coat Walkways Roof 52,000 Repaired & Replaced both roofs Ground floor walkway 9,080 Replaced exterior carpet with tile Electrical & Lighting 29,800 Replaced Lighting Photocell & Equipment Perimeter Lighting for safety Rewired all Roof electrical Replaced Rooftop Vent Motors Additional Electrical Improvements ROOMS Guest Rooms 80,500 Completely Remodeled 6 Rooms Painted Doors Purchased New Linens & Towels Bathroom Grout Cleaning Replaced 52 A/Cs with New Units Replaced 34 A/Cs with Quality Used Units Balcony Railing Repairs Miscellaneous FF & E

11 Task Name Cost Notes PUBLIC AREAS Elevator Cabs 34,500 Mechanical & Electric overhaul Replaced or Rebuilt All Pumps & Equipment Renovated Cabs Lobby 27,790 Replaced Ceiling Grid & tiles Professionally Decorated Lobby Re tiled Floor Replaced All Lighting and Fixtures Renovated Front Desk and Bell stand with Onyx Lobby FF&E Restaurant 21,300 Replaced Carpet Painted Walls Replaced artwork New Dishes, Glassware, & Silverware Replaced Linens New buffet & buffet serving pieces Replaced Kitchen Equipment Patio Lounge 11,700 Repainted Bar Area Renovated Bar top and Sides Built New Liquor Storage Cabinets Pool Area 37,450 Replaced Pool & Patio Furniture Remodeled Pool Replaced Pump Room Equipment Power Washed Pool Deck Re fenced and Re gated Pool Area Re marcite & Coping Banquet Hall 3,000 Replaced Ceiling Grid Replaced Lighting Summary Exterior 190,290 Rooms 80,500 Public Areas 135,740 Total Spent on Renovations as of 2/26/08 406,530