Private Equity/Denver Hotels/Real Estate Investment

[cwelsh 1,502]

In something completely not related to the options world, my firm has the opportunity to assemble an investment group who may be interested in purchasing two hotels in the Denver metroplex.  The investor that was going to purchase them lives in the DC metropolitan area and ultimately decided to purchase property there instead, which opens the doors to other investors.

 

Each property is currently yielding over 20% cash on cash and has an IRR well above 30%.  All of the pre-contract due diligence has been completed, underwriting will be done by early next week, and both properties already have preliminary contracts in place.  Contracts with the hotel management groups have been negotiated at substantial discounts to market averages as well.

 

Hotel 1 has a total purchase price of $14.4m and will need $5m in equity to stay under its current flag and an additional $2m to convert to a higher valued property and increase the returns.  It is not necessary to convert the flag, but it is our recommendation to do so.  Financing has been secured for the balance of the purchase price from a traditional lender.

 

Hotel 2 has a total purchase price of $11.5m and will need $4.1m in equity to finish the purchase.  We were able to secure non-recourse financing for this property.  To finish converting the flag on this one, an additional $400K will be needed.

 

We are looking for either a single investor or small group of equity investors.  We can only accept accredited investors or up to a group of 35 non-accredited investors.  It is our strong preference to keep the investor pool small (in other words I would prefer not to have 30 investors each contribute $125,000.00).  In the current commercial real estate environment to find class B/B- properties with these yields is quite difficult, which is what made them attractive to my firm.

 

If you have any interest in hospitality investing, know someone who does, or wish to learn more specific details about these projects, please email me at cwelsh@lorintinecapital.com. 

 

Also, if you have any interest in private equity transactions in general and want to discuss them, also please feel more than free to email or contact me.  We have had quite a bit of interest in assembling deals of all forms at the specific requests of accredited investors and can likely assist your needs as well.