OPEN

Ann Arbor Hotel Portfolio

BROWSE MORE DEALS
Ann Arbor, MI
Hotel
227 keys

This page has been personalized for you and contains confidential information.  Please do not share this webpage or link.  You can log in to your existing Cadre account to learn more about the investment.

Risk Profile

Value Add

Sponsor

Arbor Lodging Partners

Date Aquired

April 2022

Total Equity

$18mm

Speak with our Investor Relations Team at
(646)-494-7233
LOG IN TO LEARN MORE
$25,000 minimum investment
Certain data and information discussed below is sourced from third party sources. Please review the investment memorandum for specific sourcing information.

Summary

Cadre is acquiring a portfolio of 2 select service hotels in Ann Arbor, MI consisting of a 130-key Hilton Garden Inn and a 97-key TownePlace Suites (collectively, the “Asset”), both of which were constructed in 2012.

We were attracted by the potential to purchase alongside an experienced partner two premium branded, cash flowing hotels with unique demand generators driven by their proximity to the University of Michigan as well as to prominent companies in Ann Arbor.

Key Investment Highlights

Attractive Select Service Model

The select service sector as a whole outperformed the full service sector during the pandemic and has historically experienced lower volatility during market declines. In the current inflationary environment, acquiring these select service hotels is a better hedge against inflation as the risk of expense creep is reduced. The select service hotel model utilizes less labor per occupied room, allowing them to achieve higher operating margins while also mitigating the impact of national challenges in the labor market where low availability and rising wages have impacted most hotels.

Strong Hotel Positioning

Marriott and Hilton are the two largest hospitality companies in the world by number of guestrooms with the largest travel loyalty programs as well, boasting over 150mm and nearly 128mm members, respectively. Their reservation systems are fully integrated with revenue management to execute on pricing strategies and inventory management to increase competitiveness and market share. Brand recognition and loyalty also drives guests to the hotels. Hilton Garden Inn is Hilton Worldwide’s second-largest asset, with 862 properties in 49 countries. Among its competitive set, the TownePlace Suites Ann Arbor is considered the premium option for extended-stay demand.

Repeat Sponsorship with Proven Track Record

Arbor Lodging is a premier Chicago-based hotel investment and management company with a portfolio of 35 hotels owned across the country and more than 4,500 rooms under management. Cadre has previously partnered with Arbor on Hotel Indigo Nashville, where Arbor serves as the hotel manager. Additionally, Cadre’s senior Investments team has a longstanding relationship with the principals at Arbor.

Attractive Microlocation with Strong Demand Drivers

The hotels’ locations provide connectivity to both the University of Michigan in Downtown Ann Arbor as well as to Ann Arbor’s Research Park and surrounding office stock, driving diverse demand to the Asset.

  • Both hotels have outperformed on Revenue Per Available Room compared to all categories throughout the submarket with the TownePlace Suites significantly outperforming all other categories.
  • The hotels benefit from their location 3 miles from University of Michigan’s campus – one of the top public universities in the country, with total enrollment of 48k – and 2 miles from the “Big House” – University of Michigan’s football stadium, which is the largest stadium in North America with average attendance over 110k.
  • Research work at the University of Michigan spins off into the private sector throughout Ann Arbor, which has resulted in a thriving location for entrepreneurs and start-ups across the manufacturing, energy, technology, life sciences, healthcare and mobility sectors with unrivaled access to talent and a highly educated workforce (81% of Ann Arbor’s population has a bachelor’s degree or higher).
  • The Asset is located directly north of the largest concentration of office, industrial, warehouse and R&D space in the Ann Arbor region, making the hotels an attractive choice for business travelers.

Business Plan

Cadre’s business plan includes a combination of capital improvements in addition to improved operating margins all benefiting from continued pick up in revenue in a post-COVID world.

  • Both properties will receive upgrades throughout the common areas, corridors and elevators, boardrooms, shops, and guest laundry.
  • The TownePlace Suites underwent a renovation prior to COVID and never fully ramped up with the new renovation pre-pandemic. There will be minor improvements to help leverage the 2019 renovations.
  • The Hilton Garden Inn will undergo a more extensive renovation including renovating the guestrooms, making material upgrades to the bar and restaurant area and a significant upgrade of the fitness center.
  • Arbor’s operations team believes it can achieve better margins at the Assets given experience in similar property types and flags.

Photos

About the Opportunity

Has Cadre secured debt financing for the transaction?
When is closing?
Who is Cadre’s operating partner?
How much equity are Cadre and the Sponsor each investing in the Asset?
What are the main risks to this investment?

About the investment process

What fees will I be paying to Cadre?
What happens if I commit and fund after Initial Close?
How do distributions work?
Am I able to sell prior to the end of the hold period?
How is the deal structured?
What reports will I receive?

Ann Arbor Hotel Portfolio

Purchase Price

$41mm

Total Equity

$18mm

Underwritten Hold Period

5 years

Deal Details
Speak with our Investor Relations Team at
(646)-494-7233
SCHEDULE A CALL

Browse more deals

LOG IN TO LEARN MORE