Leisure Real Estate Blog

Another Bank Owned Hotel in Kansas City Sold

Tuesday, August 20 2013 9:56 AM
Categorized In News & Updates

Holiday Inn Express - Bonner Springs Kansas

Leisure Real Estate Advisors, LLC, is very pleased to announce the successful closed sale of the Holiday Inn Express, Bonner Springs, KS. Bonner Springs is the first I-70 suburb as one approaches Kansas City from the West. Leisure Real Estate Advisors represented the Owner, Midamerican Investments, LLC, a REO subsidiary of a local regional bank. Dream Venture, Inc, a Phoenix based company, purchased the 63 unit hotel for an undisclosed price. The listing price was $3,800,000. “It is well known that a Holiday Inn Express branded hotel is a favored investment for mid-market hoteliers and anytime we list one, we will get activity,” comments Brent A. Jaynes, co-founder and managing partner of Leisure Real Estate Advisors. “This particular asset was bank owned and it attracted a lot of interest, however, it was bank owned for a reason”, observes Jaynes.

The Keys to the Deal – Mold, PIP, & Casualty Loss

Mold:
When the owner-lender reclaimed this hotel via foreclosure, it was soon thereafter discovered the hotel had a mold issue. The owner immediately responded by engaging a certified mold remediation company, with continued oversight from an environmental engineering firm. The remediation was accomplished and upon the completion of the project, the remediation was then again, tested and certified. As one would expect, during the remediation, the owner did not market the hotel for sale, which created a longer holding period than was originally planned. Fortunately for the owner, the hotel did perform well after the remediation, and it was decided to hold the asset for a period of time, in order to recoup some the remediation costs, via the cash flow. In this case, and because of the way the remediation and inspections were handled, the mold remediation did not affect the marketability of the hotel.

PIP:
To add “insult to injury”, this hotel, while certainly performing well, was given a 60 page PIP by IHG, in order to re-license the hotel for another 10 years. Remember, this is a 63 unit hotel. The estimates for the renovation were well over a million dollars, which did create at bit of an obstacle for any buyer, as well as the affect it had on value for the current owner. In the final analysis this deal hinged on a buyer who was not intimidated by the scope of the PIP and an owner that took a realistic view of the value of the asset, after the PIP was received. It was helpful that the buyer was an experienced IHG franchisee, and had the relationship necessary to a gain approval from IHG to move forward with the relicensing. Furthermore, the size of the PIP expense created a financing issue, in that the buyer and its lender had to become creative in order to structure the acquisition loan, of which included a significant portion of the PIP improvements.

Casualty Loss:
Unfortunately, the foregoing issues were not the only obstacles incurred prior to closing. Two weeks prior to the scheduled closing, a significant thunderstorm struck the area with heavy rains and high winds. The storm created water damage in the ceiling of the lobby and breakfast area. While the damage was not significant, it did create a timing issue related to a 1031 exchange. As a result, the damage issue had to be negotiated and handled prior to closing in order to avoid any mechanics lien issues that would cause the title company to exclude mechanics lien coverage from the title policy.

“Both of these parties worked very diligently to overcome the many and daunting obstacles in this deal path. They had a common objective and that was to get the deal done. Each party stuck with the process and saw it through. It would have been easy for either side to punt any number of times, but they did not,” says Jaynes.

For more information on this sale or to discuss the investment market in general, please direct your questions to:

Brent A. Jaynes
Managing Partner
Leisure Real Estate Advisors
bjaynes@leisurerealestate.com

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Newer Hampton Inn Available for Unusually Low Per Key Price!

Thursday, August 15 2013 1:10 PM
Categorized In Property Updates

Hampton Inn - Miami, OklahomaLeisure Real Estate Advisors, LLC, is very pleased to announce its appointment as exclusive marketing agent for the Miami Oklahoma Hampton Inn.  Miami is located in northeast OK, half way between Tulsa, OK and Springfield, MO.  It is an interstate hotel (I-44 and the Oklahoma Turnpike), with great access to the lakes and to the casinos.

“We are always excited when we receive a Hampton Inn assignment”, says Brent A. Jaynes, co-founder of Leisure Real Estate Advisors.  “The Hampton Inn brand is among the strongest mid-market brands, and it usually brings a high level of investor inquiry”, comments Jaynes.  “We have been fortunate, in that a significant number of Hampton owners have entrusted their hotels to us.”

This Hampton Inn is a 74 unit hotel located just off of Exit 313, I-44.  Built in 2007, it is the newest prototype and features all of the current design requirements by Hampton, including the breakfast area.  The “Perfect Mix Lobby” initiative was rolled out during construction and the owner re-designed the breakfast area late in the construction process at considerable expense, in order to comply.  It features easy access and visibility from heavily traveled I-44 and offers a location near 13 casinos owned by various Indian tribes of NE Oklahoma.  Northeast Oklahoma A&M College is also nearby.  Besides the newer build, the most appealing aspect of the offering is the price per key.  Priced at $63K per key, it is very difficult to find any newer Hampton Inn for under $80K per key.  Needless to say, you will be dealing with a motivated seller.  His primary business is not hotels, and this is the last one in his portfolio.  His goal is to reallocate his assets back into his core business.

“It goes without saying that anytime we list a Hampton, we look forward to these assignments, and this hotel is no exception.”, says Jaynes.  Mr. Jaynes further remarked, “Over the past year, this market has normalized a bit and has transitioned from a distressed mentality.  We are seeing a good deal of activity, which is quite encouraging.   I am quite confident the offering will attract attention”.

Leisure Real Estate Advisors, LLC is based in metro Kansas City, with branch offices in Lincoln, NE and Jefferson City, MO, and has a specialty concentration in the marketing and sale of hotels.  Over its 15 year existence, the company has become one of the premier hotel brokerage firms in the country and boasts collective closing volume of over 1 billion dollars.

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Comfort Suites Wichita Airport – Deal Ilustration

Thursday, August 8 2013 8:42 AM
Categorized In Press Releases

Comfort Suites - Wichita Ks AirportLeisure Real Estate Advisors, LLC, is very pleased to announce the successful sale of the Comfort Suites hotel located at the Mid-Continent Airport, Wichita, KS. Leisure Real Estate Advisors represented the Owner, Ladiwala Hospitality, LLC, in the transaction. S&B Motels, Inc, a Wichita, KS based company, purchased the 78 unit hotel for an undisclosed price. The listing price was $6,600,000. “Because of its cash flow and location, this Comfort Suites featured an attractive top line revenue and cap rate. ,” comments Brent A. Jaynes, co-founder and managing partner of Leisure Real Estate Advisors. The airport market has historically been a one of the stronger markets in the area, and the introduction of Southwest Airlines to Mid-Continent in September was a secondary compelling factor in the transaction”, observes Jaynes.

Deal Illustration: Casualty Loss

Every deal seems to have a twist or turn that requires all parties to adjust to the circumstances presented during the deal path and the Comfort Suites was no different. Thirty days prior to closing the hotel experienced a casualty loss a result of water damage. A guest used a sprinkler head has a method to hang a set of clothes and the result was a fractured sprinkler head and hours of running water. The stream of water was fairly extensive and occurred on the 4th floor. Original assessments were that the damage was minor, but deeper investigation revealed additional damage, all resulting in additional sheet rock damage and retained moisture in the walls. In order to comply with the timeline of the 1031 Exchange, the parties had to get creative in finalizing the deal.

As one would expect, the only way to close in a timely fashion was to establish an escrow agreement and account to the satisfaction of the title company in order to issue mechanics lien coverage on the title policy. “Both of these parties and the Seller’s management company, Noble Hospitality, worked very diligently to remove the obstacles to this closing. It was team effort and a pleasure to work with folks that had the same objective in mind and stuck with the process.” says Jaynes. S&B will retain the Comfort Suites flag and will repair the damage and complete the PIP.

Leisure Real Estate Advisors, LLC is based in metro Kansas City and has a specialty concentration in the marketing and sale of hotels. It also has branch offices in Lincoln, NE, Jefferson City, MO, and soon to have an office in Minnesota. Over its 15 year existence, the company has become one of the premier hotel brokerage firms in the central US.
For more information on this sale or to discuss the investment market in general, please direct your questions to:

Brent A. Jaynes
Managing Partner
Leisure Real Estate Advisors
bjaynes@leisurerealestate.com
913-499-4731

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