SLEEP INN DESTIN, FLORIDA OFFERING MEMORANDUM

Transcription

1 OFFERING MEMORANDUM

2 NATIONAL REACH. LOCAL KNOWLEDGE. Teague Hunter President Shamir Patel Vice President Trey Scott Vice President Jatin Patel Associate

3 TABLE OF CONTENTS Executive Summary...3 Property Description Financial Overview Market Summary Disclaimers and Disclosures About Hunter

4 EXECUTIVE SUMMARY Excellent Location The Sleep Inn is conveniently located just a short walk from the beach and within close proximity to Destin Commons and Big Kahuna s Water and Adventure Park. It is also just a short drive to Elgin Air Force Base, which was one of only a few bases across the country that increased its base population post BRAC High Barriers to Entry Buyers will have an opportunity to acquire an attractive midscale hotel in a market that sees very little new growth. With no new hotels in the pipeline, the hotel is a beneficiary of the area s high barriers to entry. Property Overview Property Name Sleep Inn Destin Property Address W Emerald Coast Pkwy Destin, FL Year Built/ Renovated 1992 Number of Rooms 77 Ownership Fee Simple Structure 2 Amenities Outdoor pool Business center 3

5 EXECUTIVE SUMMARY Year End 2014 Year End 2015 Year End 2016 Forecast YE 2017 Year One Year Two Year Three Year Four Year Five Occupancy 53.5% 51.9% 52.5% 57.8% 58.0% 60.0% 62.0% 64.0% 65.0% ADR $73.15 $ $ $ $ $ $ $ $ RevPAR $39.14 $54.41 $58.81 $69.65 $72.36 $77.10 $82.06 $87.24 $91.27 Room Revenue $1,099,938 $1,529,318 $1,657,524 $1,957,524 $2,033,554 $2,166,786 $2,312,501 $2,451,993 $2,565,015 Total Revenue $1,110,475 $1,540,659 $1,667,714 $1,968,524 $2,045,342 $2,179,469 $2,326,037 $2,466,346 $2,580,029 NOI* $451,615 $669,216 $666,568 $813,348 $849,854 $925,804 $1,010,611 $1,092,996 $1,161,103 NOI % 40.7% 43.4% 40.0% 41.3% 41.6% 42.5% 43.4% 44.3% 45.0% *After 3% Management Fee and 4% FF&E Reserve 4

6 INVESTMENT CONSIDERATIONS Unencumbered by Management The Sleep Inn is being offered unencumbered of management. Unencumbered by Debt The Sleep Inn is being offered unencumbered of debt. Franchise & Property Improvement Plan (PIP) The franchise license is considered an exceptionally valuable asset of the Sleep Inn. It provides a high level of traveler allegiance and recognition, an excellent computerized reservation system, and the popular Choice Privileges Program where guests earn free nights lodging. On change of ownership, it is anticipated that Choice will require the new owner to complete a change of ownership PIP. This PIP will require certain improvements, upgrades, and modifications to the hotel as a condition of the issuance of a new, Sleep Inn franchise. The Buyer will be responsible for all repairs and renovations needed to satisfy Sleep Inn requirements. 5

7 LOCATION DESCRIPTION Location Overview & Demand Generators The Sleep Inn is an attractive, two-story, 77 guest room hotel in beautiful Destin Florida. Destin is situated on the Emerald Coast of Florida, which offers 24 miles of pristine white-sand beaches stretching along the Gulf of Mexico. The hotel s prime location makes it just a short walk to the beach, and just 22 miles south of Eglin Air Force Base, home of the Air Armament Center. The hotel is also conveniently located close to many attractions in the area including Big Kahuna s Water Park, The Track Family Recreation Center, and multiple shopping complexes that include Destin Commons and Silver Sands Factory Outlets. Corporate demand generators in the area include Emerald Coast Conference Center, Eglin and Hurlburt Field Air Force Bases, Sacred Heart Hospital, and many others. Demand Generator/Local Attraction Miles From Hotel Silver Sands Factory Stores 0.3 Grand Boulevard Town Center 2.6 The Village of Baytowne Wharf 2.9 Destin Commons 4.5 Big Kahuna s Water and Adventure Park 8.1 Harborwalk Marina 9.6 Destin Marina 9.9 Gulfarium Marine Adventure Park 14.8 Eden Garden State Park 14.9 Eglin Air Force Base 22.1 Silver Sands Factory Stores Harborwalk Marina 6

8 7

9 Destin Commons Emerald Coast Convention Center Seaside Beach Off of 30A 8 Baytowne Wharf Sandestin

10 Area Map destin fort walton beach airport eglin air force base harborwalk marina destin commons the village of baytowne wharf Big Kahuna s Water & Adventure Park silver sands factory stores 9

11 PROPERTY DESCRIPTION Guest Rooms and Amenities Guest rooms in the Sleep Inn are furnished with comfortable amenities and modern décor. Guest rooms include premier linens, work desk, ergonomic chair, sofa-bed, complimentary wireless Internet Access, and flat-screen television with premium channels. Additionally, rooms are equipped with a mini-refrigerator, microwave, and coffee/tea maker, so guests can prepare food and beverages from the comfort of their own rooms. Other amenities include a business center and outdoor pool. Food and Beverage The Sleep Inn features a complimentary breakfast for all guests, which includes both hot and cold options. In addition to breakfast, there are also many local restaurants that offer a wide variety of cuisines that are within close proximity of the hotel and deliver to hotel guests. 10

12 COMPETITIVE SET Competitive Set Hotels Sleep Inn Destin Quality Inn & Suites Destin SummerPlace Inn Best Western Sugar Sands Inn & Suites Wingate By Wyndham Destin Candlewood Suites Destin Sandestin Area Address W Emerald Coast Pkwy Destin, FL Scenic Gulf Dr Destin, FL Emerald Coast Pkwy, Destin, FL Commons Dr E, Destin, FL Palm St, Destin, FL US 98 West Destin, FL Miles to Subject N/A Opened # Rooms Stories F&B Complimentary hot breakfast Complimentary hot breakfast Complimentary hot breakfast Complimentary hot breakfast Complimentary hot breakfast Complimentary hot breakfast Additional Amenities Business center Outdoor pool Fitness center Outdoor pool Business center Fitness center Indoor and outdoor pool/ whirlpool Business center Fitness center Outdoor pool Business center Fitness center Outdoor pool Outdoor whirlpool Business center Fitness center Outdoor pool 11

13 Competitive Set Map Wingate by Wyndham Destin Best Western Sugar Sands Inn & Suites Candlewood Suites Destin-Sandestin Area SummerPlace Inn Destin Quality Inn & Suites Destin 12

14 COMPETITIVE ANALYSIS TTM March 2017 Smith Travel Research reports the following historical and comparative data for the Subject Asset. The Competitive Set is taken from those hotels that management considers to be in direct competition with the Sleep Inn. As of March 2017, the hotel achieved a 88.6% index penetration in Occupancy, a 101.0% index penetration in ADR, and a 89.4% index penetration in RevPAR, making it 5 of 6 in the Competitive Set. The Hotel s RevPAR is $61.27 in comparison to the Competitive Set average of $ Subject & Competitive Set Historical Performance Occupancy ADR RevPAR Period Subject Comp. Set Index Subject Comp. Set Index Subject Comp. Set Index Year End % 69.0% 76.1% $ $ % $52.88 $ % Year End % 61.3% 85.2% $ $ % $55.12 $ % Year End % 60.1% 87.4% $ $ % $59.56 $ % TTM March % 60.10% 87.4% $ $ % $59.56 $ % Change vs. Prior Year Year End % -11.2% 11.9% 4.8% 7.5% -2.5% 4.2% -4.4% 9.1% Year End % -2.0% 2.6% 7.4% 3.6% 3.6% 8.1% 1.5% 6.5% TTM March % -2.0% 2.7% 7.4% 3.6% 3.7% 8.1% 1.5% 6.5% Source: Smith Travel Research 13

15 HISTORICAL FINANCIAL STATEMENT Year End 2014 Year End 2015 Year End 2016 Forecast Year End 2017 Rooms Available Rooms 28,105 28,105 28,182 28,105 Occupied Rooms 15,036 14,586 14,796 16,250 Occupancy 53.5% 51.9% 52.5% 57.8% ADR $73.15 $ $ $ ADR % Change % 6.85% 7.5% RevPAR $39.14 $54.41 $58.81 $69.65 RevPAR % Change % 8.09% 18.4% Revenue Amount Percent Amount Percent Amount Percent Amount Percent Rooms $1,099, % $1,529, % $1,657, % $1,957, % Other Operated Departments $10, % $11, % $10, % $11, % Total Revenue $1,110, % $1,540, % $1,667, % $1,968, % Departmental Expenses Rooms $208, % $310, % $366, % $400, % Total Expenses $208, % $310, % $366, % $400, % Gross Operating Income $901, % $1,229, % $1,300, % $1,567, % Undistributed Operating Expenses Administrative & General $60, % $84, % $135, % $125, % Franchise Fees $144, % $156, % $192, % $227, % Sales & Marketing $ % $0 0.0% $86 0.0% $ % Repairs & Maintenance $36, % $56, % $34, % $58, % Utilities $64, % $95, % $82, % $111, % Total Undistributed Operating Expenses $306, % $392, % $444, % $523, % Gross Operating Profit $595, % $837, % $856, % $1,044, % Fixed Charges Insurance $53, % $37, % $50, % $67, % Property Taxes $12, % $22, % $21, % $25, % Management Fees (1) $33, % $46, % $50, % $59, % Total Fixed Charges $98, % $106, % $122, % $152, % EBITDA $496, % $730, % $733, % $892, % Reserve for Replacement (2) $44, % $61, % $66, % $78, % Net Operating Income $451, % $669, % $666, % $813, % (1) Management Fees have been assumed to be 3.00% of Total Revenues. (2) Replacement Reserve has been assumed to be 4.00% of Total Revenues. 14

16 PRO FORMA FINANCIAL STATEMENT Year 1 Year 2 Year 3 Year 4 Year 5 Rooms Available Rooms 28,105 28,105 28,182 28,105 28,105 Rooms Sold 16,301 16,863 17,473 17,987 18,268 Occupancy 58.0% 60.0% 62.0% 64.0% 65.0% ADR $ $ $ $ $ ADR % Change % 3.0% 3.0% 3.0% RevPAR $72.36 $77.10 $82.06 $87.24 $91.27 RevPAR % Change % 6.4% 6.3% 4.6% Revenue Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Rooms $2,033, % $2,166, % $2,312, % $2,451, % $2,565, % Other Operated Departments $11, % $12, % $13, % $14, % $15, % Total Revenue $2,045, % $2,179, % $2,326, % $2,466, % $2,580, % Departmental Expenses Rooms $424, % $447, % $473, % $497, % $514, % Total Expenses $424, % $447, % $473, % $497, % $514, % Gross Operating Income $1,620, % $1,731, % $1,852, % $1,969, % $2,065, % Undistributed Operating Expenses Administrative & General $162, % $167, % $171, % $175, % $177, % Franchise Fees $236, % $251, % $268, % $284, % $298, % Sales & Marketing $89 0.0% $91 0.0% $93 0.0% $94 0.0% $96 0.0% Repairs & Maintenance $42, % $43, % $45, % $45, % $46, % Utilities $98, % $100, % $102, % $104, % $106, % Total Undistributed Operating Expenses $540, % $564, % $588, % $611, % $628, % Gross Operating Profit $1,080, % $1,167, % $1,264, % $1,358, % $1,436, % Fixed Charges Insurance $60, % $62, % $63, % $64, % $65, % Property Taxes $26, % $26, % $27, % $27, % $28, % Management Fees $61, % $65, % $69, % $73, % $77, % Total Fixed Charges $148, % $154, % $160, % $166, % $171, % EBITDA $931, % $1,012, % $1,103, % $1,191, % $1,264, % Reserve for Replacement $81, % $87, % $93, % $98, % $103, % Net Operating Income $849, % $925, % $1,010, % $1,092, % $1,161, % Hunter and their respective affiliates, officers, and directors neither warrants nor guarantees the results of these projections and analyses since unanticipated events and/orcircumstances may occur. All potential investors must conduct and rely upon their own due diligence as well as underwriting with respect to estimating the future operating performance of the property. 15

17 MARKET SUMMARY Destin, Florida Located in Okaloosa County, Destin is the principal city of the Fort Walton Beach-Crestview-Destin, Florida Metropolitan Statistical Area, which is home to nearly 250,000 residents. Originating as a small fishing village on a peninsula separating the Gulf of Mexico from Choctawhatchee Bay, the city styles itself as The World s Luckiest Fishing Village, and claims to have the largest fishing vessel fleet in the state of Florida. Destin is now a major tourist destination, attracting over 80 percent of the Emerald Coast s 4.5 million annual visitors. Situated on Florida s Emerald Coast, Destin is known for its stunning white beaches and emerald green waters. The sand along the coast is made up of pure Appalachian quartz, which remains remarkably cool even in the heat of summer, and gives the waters their trademark emerald-green color by reflecting sunlight back up through the surf. Okaloosa County Major Employers Industry # of Employees Okaloosa County School District 3,057 Fort Walton Beach Medical Center 1,065 Lockheed Martin Corporation 926 Reliance Test and Technology 800 Okaloosa Board of County Commissioners 733 North Okaloosa Medical Center 643 L-3 Crestview Aerospace 612 CenturyLink 600 Walmart (Okaloosa combined) 600 Asurion Company 535 Miles from Destin Panama City, FL Mobile, AL Tallahassee, FL New Orleans, LA Jacksonville, FL 52 mi 125 mi 157 mi 268 mi 319 mi Fort Walton Beach Fort Walton Beach MEdical Center 16

18 17 Fort Walton Beach

19 MARKET SUMMARY Tourism In addition to the 24 miles of stunning white beaches and emerald waters, visitors can charter fishing vessels from the harbor via 12 beach access points across the city. Among the access points is Henderson Beach State Recreation Area, which is a Florida State Park and offers visitors a boardwalk, pavilions for picnicking and grilling and 60 campsites. Destin also hosts an array of events throughout the year that attracts visitors from across the country. Major events include the annual Destin Fishing Rodeo, which is held in October and has drawn anglers to Destin each year since The Destin Seafood Festival is also a major attraction in October that offers visitors amazing food, live music, and events for the whole family. Over 3.6 million people visit Destin annually Visitors to Destin and the surrounding area generate over $1.3 billion in total sales Destin, FL 18

20 MARKET SUMMARY Eglin Air Force Base Eglin Air Force Base is a United States Air Force base located approximately 3 miles southwest of Valparaiso, Florida in Okaloosa County. Eglin is home to the Air Armament Center (AAC), which is one of three product centers in the Air Force Materiel Command (AFMC). The base also supports the largest single base mobility commitment in the Air Force. Serving as major hub for all Air Force armaments, the AAC is the center responsible for the development, acquisition, testing, deployment, and sustainment of all air-delivered weapons. The AAC is also a major hub for acquisition of the world s most advanced armament products. The center engages in scientific research, system management, production, operational performance, business management, requirements definition, customer and engineering support, technology planning, materiel identification, and field support activities. It also plans, directs, and conducts tests and evaluations of U.S. and allied air armament, navigation, and guidance systems. BRAC made a major impact on Eglin and the surrounding infrastructure as the overall base population increased to approximately 38,000 in 2015 Big Kahuna s Water and Adventure Park Eglin Air Force Base Big Kahuna s Water and Adventure Park Opened in 1986, Big Kahuna s has been Destin s one and only water park for over 30 years. Big Kahuna offers visitors more than 40 water attractions, an adventure park, a miniature golf course, and various restaurants located across the park. With attractions for the whole family, the park allows visitors to enjoy a fun filled day with rides, slides, and pools. 19

21 MARKET SUMMARY Destin Commons Attracting 11 million shoppers annually, Destin Commons is Northwest Florida s premier open-air lifestyle center. The award winning architecturally unique center stretches across 56-acre, and features more than 90 stores and restaurants that offer the finest shopping, dining and entertainment, including Bass Pro Shops, Belk, H&M, Chipotle, AMC Destin 14-screen stadium style movie theatre and Uncle Buck s Fish Bowl & Grill. Destin Commons also offers 70,000 square feet of Class A office space, free WiFi access, interactive children s pop fountain, and Pirate s Cove children s soft play area. Destin Commons stretches across 56 acres, employs over 1000 full-time employees, and attracts 11 million shoppers each year Destin Commons 20

22 DISCLAIMERS AND DISCLOSURES BROKER DISCLAIMER This confidential offering memorandum has been prepared by Hunter Hotel Advisors ( Broker ) in cooperation with the Seller, solely for the limited use of prospective purchasers. The offering memorandum is not intended to provide all the information necessary to reach a purchase decision. Each prospective purchaser is encouraged to do its own thorough review and gather and verify to its satisfaction all information about the property. The undersigned understands and acknowledges that there is no representation or warranty as to accuracy or completeness of the information provided. While the financial, operational, property description, projections and other information herein is compiled from sources believed to be reliable, neither Broker nor Owner guarantee, represent or warrant its accuracy or completeness. Because of the foregoing, and since the Property is being offered on an As Is, Where Is basis, Purchaser should use such information solely to facilitate his investigation and must make independent investigations, projections and conclusions regarding the acquisition of the Property without reliance on this offering memorandum. As to pro forma projections, these were prepared by Broker based on many assumptions and events over which owner and broker have no control and are not guaranteed. Buyers should use such projections for an initial review only and are urged to do their own study and projections before taking action relative to the Property. No liability is assumed for errors and omissions, misstatements of facts, prior sale, change-of-price or withdrawal from the market without notice AS IS, WHERE IS This hotel is being offered As Is, Where Is, with all faults and limitations. Purchaser should do his own studies to properly understand what he will be buying. AMERICANS WITH DISABILITIES ACT The owner and broker make no representations regarding this property and this law. A buyer should consult knowledgeable experts and attorneys regarding these matters. AGENCY Hunter Hotel Advisors, is the exclusive agent of the Seller, represents the Seller only and shall be compensated by Seller. CONFIDENTIAL All information contained in this offering is confidential in nature and must be held in the strictest confidence, except information which is a matter of public record. Duplication or reproduction of any of the contents of this document or other information provided to you by Broker about this property, without the express written permission of Broker, is prohibited. RETURN OF INFORMATION This memorandum is the property of Hunter Hotel Advisors, and is intended to be used only by such parties to whom Broker has delivered the memorandum or to whom Broker has approved such delivery. If, after review, you have no interest in purchasing the property at this time, KINDLY RETURN OR DESTROY THIS MEMORANDUM and all other information provided to you by Seller, Broker or others to Broker at your earliest convenience. PROPERTY TOURS AND INFORMATION PLEASE DO NOT VISIT THE HOTEL WITHOUT MAKING PRIOR ARRANGEMENTS THROUGH THE BROKER. Please do not contact management or hotel owner, nor talk to any employees. All due diligence information must be provided through Hunter Hotel Advisors and all property tours must be scheduled through Hunter Hotel Advisors. A Hunter representative must be present for all tours. ENVIRONMENTAL ISSUES The Seller and Broker specifically make no representations whatsoever about any environmental conditions on the property, including but not limited to issues such as asbestos, hazardous waste, mold and mildew, petroleum leaks or spills. Each prospective purchaser is encouraged to do his own study and analysis and determine to his own satisfaction the status of the various issues. 21

23 ABOUT HUNTER Hunter Hotel Advisors is the nation s leading investment advisory firm focused exclusively on the hotel industry. Our seasoned team of investment professionals and offices nationwide consistently provide clients with optimal results in hotel brokerage, financial advisory and capital markets services of any size or complexity. With over 35 years of experience in full and select-service single assets and portfolios, the firm s capacity in valuation, economic analysis, and industry relationships has allowed us to consistently maximize value regardless of market conditions. Bob Hunter, CEO Bob.Hunter@HunterHotels.net Teague Hunter, President Teague.Hunter@HunterHotels.net Lee Hunter, COO Lee.Hunter@HunterHotels.net Danny Givertz, Sr Vice President Danny.Givertz@HunterHotels.net Robert M. Taylor, Sr Vice President Robert.Taylor@HunterHotels.net Steve Taylor, Sr Vice President Steve.Taylor@HunterHotels.net Trey Scott, Vice President Trey.Scott@HunterHotels.net Brown Kessler, Vice President Brown.Kessler@HunterHotels.net Marilyn Cox, Vice President Marilyn.Cox@HunterHotels.net Mayank Patel, Vice President Mayank.Patel@HunterHotels.net Tim Osborne, Vice President Tim.Osborne@HunterHotels.net David Perrin, Vice President David.Perrin@HunterHotels.net Shamir Patel, Vice President Shamir.Patel@HunterHotels.net Brian C. Embree, Sr Associate Brian.Embree@HunterHotels.net Jatin Patel, Associate Jatin.Patel@HunterHotels.net Daniel Riley, Sr Analyst Daniel.Riley@HunterHotels.net Blair Revercomb, Analyst Blair.Revercomb@HunterHotels.net Capital Markets Stephen Gaylor, SVP Capital Markets Stephen.Gaylor@HunterHotels.net 22

24