Confidential Offering Memorandum€¦ · This Offering Memorandum has been prepared by HVS for use by a limited number of recipients. All information contained herein has been obtained

BEDFORD - DALLAS

Confidential Offering Memorandum

This Offering Memorandum has been prepared by HVS for use by a limited number of recipients. All information contained herein has been obtained from sources other than HVS, and neither the Owner nor HVS (nor their respective equity holders, officers, employees, and agents) makes any representations or warranties, expressed or implied, as to the accuracy or completeness of the information contained herein. Further, the Offering Memorandum does not constitute a representation that no change in the business or affairs of the Property or the Owner has occurred since the date of the preparation of the Offering Memorandum. All analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the Recipient. The Owner and HVS, as well as their respective officers, directors, employees, equity holders, and agents, expressly disclaim all liability that may be based upon or relate to the use of the information contained in this Offering Memorandum. Additional information and an opportunity to inspect the Property will be made available upon written request to interested and qualified prospective investors.

The Owner and HVS each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the Property and/or to terminate discussions with any entity at any time with or without notice. The Owner shall have no legal commitment or obligations to any Recipient reviewing this Offering Memorandum or making an offer to purchase the Property unless and until such offer is approved by the Owner; a written agreement for the purchase of the Property has been fully executed, delivered and approved by the Owner and its legal counsel; and any obligations set by the Owner thereunder have been satisfied or waived.

The Recipient agrees that (a) the Offering Memorandum and its contents are confidential information, except for such information contained in the Offering Memorandum, which is a matter of public record, or is provided from sources available to the public; (b) the Recipient, the Recipient’s employees, agents, and consultants (collectively, the “need to know parties”) will hold and treat it in the strictest of confidence, and the Recipient and the “need to know parties” will not, directly or indirectly, disclose or permit anyone else to disclose its contents to any other person, firm, or entity without the prior written authorization of HVS and the Owner; and (c) the Recipient and the “need to know parties” will not use or permit to be used this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Owner or HVS, or for any purpose other than use in considering whether to purchase the Property. The Recipient and the “need to know parties” agree to keep this Offering Memorandum and all confidential information contained herein permanently confidential and further agree to use this Offering Memorandum for the purpose set forth above. If the Recipient has no interest in the Property, or if the Recipient or the Owner discontinue negotiations in the future, the Recipient will return this Offering Memorandum to HVS.

DISCLAIMER

TABLE OF CONTENTS

EXECUTIVE SUMMARY 4

6

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38

INVESTMENT HIGHLIGHTS

PROPERTY OVERVIEW

LOCATION OVERVIEW

LODGING MARKET OVERVIEW

FINANCIAL OVERVIEW

EXECUTIVE SUMMARY

DISCLAIMER: PHOTO NOT OF ACTUAL PROPERTY, BUT FROM SIMILAR STAYBRIDGE SUITES OR RENDERINGS

The subject site benefits from its strategic location near the interchange of State Highways 121 and 183 (Texas 183 toll road), near a multitude of corporate and leisure demand drivers, including the expanding Dallas-Fort Worth International Airport (DFW), Texas Health Resources, State National Companies, and Bell Helicopter Textron, Inc. Leisure demand generators in the greater area include Six Flags Over Texas, Six Flags Hurricane Harbor, Globe Life Rangers Ballpark, and Dallas Cowboys’ AT&T Stadium. Additionally, the area's network of interstates and highways allows Bedford to be within an easy drive of the sprawling cities within the Dallas/Fort Worth Metroplex. An investor will have the opportunity to realize the substantial value of constructing a nationally branded hotel in a growing market, creating significant upside from current cash flow and upon exit of the investment.

HVS, as the sole and exclusive advisory firm to Ownership, is pleased to present the opportunity to acquire the fee simple interest in a 1.34-acre site within the growing Bedford submarket of Dallas (herein referred to as the “subject site”). The land is fully entitled to be developed as a 70-key Staybridge Suites hotel—an upscale, IHG-affiliated, extended-stay brand.

Investment TypeFully Entitled

Development Project

Keys70

SubmarketDFW Airport West

Pricing Guidance $895,000

Price Per Key $12,786

INVESTMENT HIGHLIGHTS


Upon acquisition and approval, an investor can expect a new, 20-year license agreement with IHG. The all-suite design promotes guest independence, which yields to lower housekeeping costs and higher profits. This business model benefits an investor to operate an asset that yields high GOP margins and NOI flow-through.

The brand’s extended-stay orientation helps to drive occupancy levels and reduce the team member-to-guest ratio, which results in lower operating costs and some of the highest profit margins in the industry. Per IHG, 55% of Staybridge guests spend approximately five nights (or more) at the hotel, a coveted achievement throughout the industry.

The award-winning IHG® Rewards Club loyalty program is one of the largest in the hotel industry, offering members more choices to redeem their points than any other hotel loyalty program in the world. Serving over 100 million enrolled members worldwide, IHG Rewards Club is an effective tool for driving customers to IHG hotels and creating brand loyalty.

LONG-TERM FRANCHISE AGREEMENT WITH IHG


INVESTMENT HIGHLIGHTS8

The subject site is strategically located within the City of Bedford, proximate to the growing Dallas-Fort Worth International Airport (DFW) and numerous dining, retail, and entertainment options around, which is a positive attribute for both business and transient guests. The subject site is less than 20 minutes away from Six Flags Over Texas, Six Flags Hurricane Harbor, Globe Life Rangers Ballpark, and Dallas Cowboys’ AT&T Stadium. Available dining options nearby include:

• Pappadeaux• Chili’s Grill & Bar• Starbucks• Bedford Ice House• On the Border Mexican Grill & Cantina

This past June, DFW airport officials announced a $3-billion expansion of a sixth terminal by 2025. The new terminal will bring 24 new gates and will be capable of handling more than 200 flights a day.

The nearby Grapevine Mills shopping mall features 180 stores across its 1,600,000 square feet of retail space; it is anchored by H&M, Neiman Marcus, Saks Fifth Avenue, Disney Store Outlet and a 30-theatre AMC.

Corporate demand generators in the area include Texas Health Resources, Carter BloodCare, Warrantech Corp., State National Companies, and Bell Helicopter Textron, Inc.

EXCELLENT LOCATION AMONG STRONG CORPORATE AND LEISURE DEMAND GENERATORS

The subject site presents an opportunity for a developer to construct a Staybridge Suites hotel in a major MSA, with an attractive exit capitalization rate. Following construction and stabilization of operations, this asset would be a desired investment for the comprehensive pool of area and regional investors interested in hotel products.

SIGNIFICANT UPSIDE FOR DEVELOPER TO EXIT

PROMINENT DEMAND GENERATORS IN THE AREA


HISTORICAL AND PROJECTED ROOMS REVENUE METRICSOccupancy Average Rate RevPAR

Year Total % Change Total % Change Total % Change

Projected

2019/20 67.0 % — $98.88 — $66.25 —2020/21 71.0 6.0 % 104.67 5.9 % 74.32 12.2 %

2021/22 75.0 5.6 107.81 3.0 80.86 8.8 2022/23 75.0 0.0 111.05 3.0 83.28 3.0 2023/24 75.0 0.0 114.38 3.0 85.78 3.0

HISTORICAL AND PROJECTED REVENUE, HOUSE PROFIT, AND EBIDTA LESS REPLACEMENT RESERVETotal Revenue House Profit House

Profit Ratio

EBITDA Less Replacement Reserve

Year Total % Change Total % Change Total % ChangeAs a % of

Ttl Rev

Projected

2019/20 $1,736,773 — $826,918 — 47.6 % $570,058 — 32.8 %2020/21 1,945,029 12.0 % 978,416 18.3 % 50.3 686,599 20.4 % 35.32021/22 2,114,337 8.7 1,094,771 11.9 51.8 766,407 11.6 36.22022/23 2,177,767 3.0 1,127,612 3.0 51.8 789,396 3.0 36.22023/24 2,243,100 3.0 1,161,420 3.0 51.8 813,046 3.0 36.2

NE

W

PROPERTY OVERVIEW


Proposed Property Name Staybridge Suites

Address 2609 Airport Freeway, Bedford, TX 76021

Submarket/Tract Bedford

Number of Rooms 70

Food & Beverage Complimentary Breakfast Buffett, Market Pantry

Meeting Space 850 Square Feet

Elevators One

Lot Size 101,364 SF (1.34 acres)

Parcel Number 41040198

Management Unencumbered

Ownership Interest Fee simple

ROOM BREAKDOWN

King One-Bedroom 14

King One-Bedroom ADA 5

King Studio 30

King Studio ADA 3

Queen/Queen Studio 15

Queen/Queen Studio ADA 3

Total 70

15



Staybridge Suites guestrooms feature a fully equipped kitchen with a refrigerator, stove, dishwasher, cooking pots/pans/utensils, microwave, and coffeemaker. Other in-room amenities include high-speed Internet access and flat-screen televisions. Business travelers benefit from a desk area with an ergonomic office chair, an iron and ironing board, and a sofa for relaxation.

GUESTROOM SUITES

Staybridge Suites hotels offer complimentary hot breakfast buffet daily, as well as an evening reception with complimentary food and drinks three nights a week.

FOOD AND BEVERAGE



Additional amenities at the hotel are expected to include a meeting room and boardroom, a fitness room, an indoor swimming pool and whirlpool, a business center, a guest laundry facility, a market pantry, an outdoor grill area, a hotel shuttle, daily housekeeping service, and valet dry-cleaning service. Guests will also be able to take advantage of the complimentary Wi-Fi and hard-wired Internet in rooms, as well as complimentary parking.

OTHER AMENITIES


LOCATION OVERVIEW

SOURCE: BEDFORD WEBSITE

The subject site is located within the Hurst-Euless-Bedford market area of the Dallas/Fort Worth Metroplex. Bedford is a city located in northeast Tarrant County, Texas, in the "Mid-Cities" area between Dallas and Fort Worth; the community is a suburb of Fort Worth. As the western anchor city of the Dallas/Fort Worth Metroplex, Fort Worth is known as “Cowtown” (as the cattle industry initially spurred economic development in the city). Today, glass-and-steel skyscrapers share the sidewalks of Downtown with renovated historic districts such as the Fort Worth Stockyards National Historic District and Sundance Square. In the last two decades, a handful of major catalysts changed the infrastructure and economic landscape of the city, including the Fort Worth Tornado in 2000 that devastated the downtown area but also ultimately helped transform the face of the city’s core. Natural gas exploration within the Barnett Shale peaked in 2008 and played a synergistic role in the greater Fort Worth area; despite plummeting oil and gas prices and increased activity in other parts of Texas and across the country, this sector of the energy industry continues to provide ongoing benefits to the economy. Moreover, the 28-mile Chisholm Trail Parkway toll road has spurred economic growth along its path since its opening in 2014.

HURST EULESS BEDFORD

HURRICANEHARBOR

OVER TEXASCORPORATE

Selected Demand Generators

LOCATION OVERVIEW23

Nestled in the rolling prairies of north-central Texas, Dallas is a sophisticated, bustling metropolis that has earned its reputation in the marketplace of the world. Less than 30 miles separate Dallas from neighboring Fort Worth, leading to the coinage of "Metroplex” to describe the two cities and their surrounding suburbs. The Dallas economy is highly diversified, and the city is the leading commercial, marketing, and industrial center of the southwest; as such, Dallas boasts a broadly diverse business climate, led by the technology sector. Major industries include defense, financial services, information technology and data, life sciences, telecommunications, and transportation.

The Dallas/Fort Worth International Airport area is home to a variety of aviation-related industries. The northern airport area is also home to regional operations headquarters for such international corporations as Nissan and L-3 Communications, among others. CAE is a leading provider of simulation and modeling technologies and integrated training services for civil aviation and defense customers worldwide. CAE's Dallas/Fort Worth International Airport facility is the largest corporate aviation-training center in the world. The 426,000-square-foot facility contains 36 FAA Level C and D business aircraft simulators, fully equipped state-of-the-art classrooms, an aviation resource center, and a dining room. In addition, global and national corporations, associations, and organizations find the airport’s central location convenient for hosting planning, training, and strategy meetings in the Dallas/Fort Worth Metroplex.

TOP EMPLOYERS

Rank Firm Employees

1 Lockheed Martin Aeronautics Co. 13,500

2 NAS Fort Worth Joint Reserve Base 5,361

3 American Airlines 4,118

4 Cook Children's Medical Center 3,900

5 Bell Helicopter Textron, Inc. 3,820

6 John Peter Smith Hospital 3,811

7 Harris Methodist Fort Worth Hospital 3,500

8 Radio Shack Corporation 3,337

9 Burlington Northern Santa Fe Railway 3,100

10 Tarrant County/Family Court Services 3,085

SOURCE: NORTH TEXAS COUNCIL OF GOVERNMENTS

DALLAS, TX

DFW SUBMARKET OVERVIEW

Average AnnualCompounded Change

2000 2010 2017 2020 2000-10 2010-17 2017-20

Resident Population (Thousands)

Tarrant County 1,456.9 1,817.7 2,042.1 2,123.5 2.2 % 1.7 % 1.3 %

Dallas-Fort Worth-Arlington, TX MSA 5,235.4 6,452.7 7,350.5 7,730.2 2.1 1.9 1.7

Dallas-Fort Worth, TX-OK CSA 5,628.3 6,878.5 7,794.4 8,186.7 2.0 1.8 1.7

State of Texas 20,944.5 25,244.3 28,274.3 29,611.5 1.9 1.6 1.6

United States 282,162.4 309,348.1 325,888.1 335,057.8 0.9 0.7 0.9

Per-Capita Personal Income*

Tarrant County $36,669 $39,060 $43,817 $45,574 0.6 1.7 1.3

Dallas-Fort Worth-Arlington, TX MSA 40,540 39,952 47,058 49,024 (0.1) 2.4 1.4

Dallas-Fort Worth, TX-OK CSA 39,586 39,360 46,356 48,322 (0.1) 2.4 1.4

State of Texas 33,856 37,276 42,827 44,737 1.0 2.0 1.5

United States 36,812 39,622 45,335 47,348 0.7 1.9 1.5

W&P Wealth Index

Tarrant County 102.3 101.2 99.3 98.8 (0.1) (0.3) (0.2)

Dallas-Fort Worth-Arlington, TX MSA 112.7 103.8 106.2 105.8 (0.8) 0.3 (0.1)

Dallas-Fort Worth, TX-OK CSA 109.5 101.9 104.2 103.9 (0.7) 0.3 (0.1)

State of Texas 93.4 95.4 95.7 95.7 0.2 0.0 (0.0)

United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0

Food and Beverage Sales (Millions)*

Tarrant County $2,360 $3,182 $4,326 $4,584 3.0 4.5 2.0

Dallas-Fort Worth-Arlington, TX MSA 8,138 10,654 14,958 15,998 2.7 5.0 2.3

Dallas-Fort Worth, TX-OK CSA 8,492 11,087 15,545 16,609 2.7 4.9 2.2

State of Texas 27,748 37,635 53,896 57,560 3.1 5.3 2.2

United States 368,829 447,728 588,681 615,384 2.0 4.0 1.5

Total Retail Sales (Millions)*

Tarrant County $22,869 $27,725 $35,821 $37,859 1.9 3.7 1.9

Dallas-Fort Worth-Arlington, TX MSA 80,693 94,010 122,302 130,757 1.5 3.8 2.3

Dallas-Fort Worth, TX-OK CSA 85,514 98,721 127,954 136,665 1.4 3.8 2.2

State of Texas 291,221 341,775 442,038 470,718 1.6 3.7 2.1

United States 3,902,830 4,130,414 4,999,879 5,227,450 0.6 2.8 1.5

* Inflation Adjusted SOURCE: WOODS & POOLE ECONOMICS, INC.

ECONOMIC AND DEMOGRAPHIC DATA

The subject market benefits from a variety of tourism and leisure attractions in the area. Leisure demand generators include the primary entertainment and professional sports venues in the Dallas Metroplex, including Six Flags Over Texas, Six Flags Hurricane Harbor, AT&T Stadium (home of Dallas Cowboys), Globe Life Park in Arlington, Texas Motor Speedway, and American Airlines Center.

The Metroplex's primary meeting facilities are the Kay Bailey Hutchison Convention Center and the Fort Worth Convention Center, while Dallas is also served by the Irving Convention Center. Convention demand in the greater Lewisville market is also driven by the presence of the Gaylord Texan Resort & Convention Center's extensive meeting and group facilities. Area hotels such as the Embassy Suites DFW Airport North Outdoor World Grapevine and Great Wolf Lodge Grapevine also offer sizable meeting facilities, as does the Hilton DFW Lakes Executive Conference Center, which is a certified conference center.

The Kay Bailey Hutchison Convention Center, formerly the Dallas Convention Center, contains a total of 1,035,945 square feet of exhibit space in addition to the theater and arena. The center offers three ballrooms of 27,000, 20,000, and 19,000 square feet, respectively; a theater with 1,750 opera-style seats; and an arena that features seating for approximately 9,800. The 1,001-room convention headquarters Omni Hotel, located adjacent to the convention center, opened in November 2011. In 2012, the 19,000-square-foot Ballroom D and 900-square-foot Executive Conference Room were added. In April 2013, the Dallas City Council voted unanimously to rename the convention center in honor of longtime Texas Senator Kay Bailey Hutchison. According to the Dallas CVB, there are preliminary plans to expand the convention center; however, the project remains in the discussion phase, and no further details were provided.

TOURISM & LEISURE

CONVENTIONS & MEETINGS

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60K

110K

160K

210K

260K

310K

360K

2012 2013 2014 2015 2016 2017

Num

ber o

f Eve

nts

Num

ber o

f Att

ende

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Kay Bailey Hutchinson Convention Center

Number of Attendees Number of Events

In 2011, construction was completed on the Irving Convention Center, which is located in the Las Colinas Urban Center. The convention center is part of a multi-phased development that will be one of the premier mixed-use entertainment and convention facilities in the country. The first phase was completed in January of 2011 and features a 275,000-square-foot convention facility with a 50,000-square-foot, column-free exhibit hall; a 20,000-square-foot ballroom; 20 conference rooms; and an 800-space parking structure. This first phase of the development, which cost $137 million, was fully funded by hotel occupancy taxes. The second phase of the development, the Toyota Music Factory entertainment complex, which is operated by Live Nation, one of the world's premier entertainment companies, opened in late 2017. The $175 million facility includes an 8,000-seat amphitheater, 300,000 square feet of restaurant and retail space, a concert hall, and 100,000 square feet of office space. The final phase of the development, a 350-room Westin hotel located adjacent to the convention center, is expected to open in late 2019.

KAY BAILEY HUTCHINSON CONVENTION CENTER

Year Number of Attendees Number of Events

2012 265,500 58

2013 242,304 64

2014 261,178 58

2015 295,406 67

2016 298,394 59

2017 323513 73SOURCE: KAY BAILEY HUTCHINSON CONVENTION CENTER

Dallas/Fort Worth International Airport (DFW) is one of the nation's largest airports and serves as headquarters for American Airlines. In February 2011, the $2.7 billion DFW International Airport Terminal Renewal and Improvement Program (TRIP), a seven-year plan to improve Terminals A, B, C, and E, commenced. Additionally, the DART Rail Orange Line connection inside the airport opened in August 2014. The comprehensive renovation of Terminal A was completed in January 2017, and Terminal E was completed in August 2017. Terminal B renovations were completed in March 2018, and 15 additional gates are expected to be added to Terminal E in 2019. Plans to renovate Terminal C have been placed on hold as the possibility of building a sixth terminal (Terminal F) is considered; officials estimate that construction would span roughly five years if the project were to move forward. In July 2018, the Federal Aviation Administration granted $180 million to DFW to add new perimeter taxiways to eliminate the waiting period required for aircraft to safely cross runways during busy periods. Construction on these new taxiways is expected to be completed by 2021.

TRANSPORTATION

SOURCE: ORLANDO INTERCONTINENTAL AIRPORT

*Annual average compounded percentage change from the previous year**Annual average compounded percentage change from first year of data

DALLAS/FORT WORTH INTERNATIONAL AIRPORT (DFW) PASSENGER TRAFFIC

Year Passenger Traffic Percent Change* Percent Change**

2009 56,030,457 — —

2010 56,905,600 1.6 1.6

2011 57,806,918 1.6 1.6

2012 58,590,633 1.4 1.5

2013 60,436,739 3.2 1.9

2014 63,522,823 5.1 2.5

2015 65,512,471 3.1 2.6

2016 65,598,618 0.1 2.3

2017 67,092,224 2.3 2.3

2018 69,112,607 3.0 2.4

YTD Jul 2018 40,584,223 — —

YTD Jul 2019 43,273,741 6.6 —

Dallas Love Field Airport is a public airport located northwest of Dallas, Texas. Love Field was the primary airport for Dallas until Dallas/Fort Worth International Airport opened in 1974. Love Field was designated as a Texas State Historical Site in 2003, celebrating 90 years in the aviation industry in 2007. The five-year, $519-million renovation of Love Field, through a joint venture between the City of Dallas and Southwest Airlines, was completed in October 2014. The timing of the capital project's completion coincided with the end of federal restrictions on how far planes can fly from the airport as part of the Wright Amendment. The project included replacing the terminals with a 20-gate concourse; the first twelve gates opened in 2013, while the remaining eight gates opened in early October 2014. Other renovation projects included an expanded baggage-claim area, a remodeled lobby, and a new ticketing wing; additionally, a new, 5,000-space parking garage. The airport is primarily served by Southwest Airlines; however, Delta Air Lines has been trying to increase the number of gates it operates because of the continued growth in passenger traffic.

DALLAS LOVE FIELD (DAL) PASSENGER TRAFFIC

Year Passenger Traffic Percent Change* Percent Change**

2009 7,744,522 — —

2010 7,960,809 2.8 2.8

2011 7,982,844 0.3 1.5

2012 8,173,927 2.4 1.8

2013 8,470,586 3.6 2.3

2014 9,413,706 11.1 4.0

2015 14,497,498 54.0 11.0

2016 15,562,738 7.3 10.5

2017 15,723,627 1.0 9.3

2018 16,229,151 3.2 8.6

YTD Jul 2018 9,427,840 — —

YTD Jul 2019 9,685,097 2.7 —

SOURCE: DALLAS LOVE FIELD

*Annual average compounded percentage change from the previous year**Annual average compounded percentage change from first year of data

RECENT LOCAL AREA DEVELOPMENT AND ECONOMIC INITIATIVES

Located in Euless, the Glade Parks Town Center opened in December 2018. The development features over 800,000 square feet of retail, dining, and entertainment on 194 acres. The Town Center has a landscaped plaza where the shopping center can host family entertainment and events.

GLADE PARKS TOWN CENTER

In June 2019, Dallas Fort Worth International Airport and chief tenant American Airlines agreed to build a sixth passenger terminal (Terminal F), the first such expansion since 2005. Moreover, Terminal C, which opened with the airport in 1974, will undergo renovation. Together, the projects have been estimated at $3.5 billion. Terminal F, which could open by 2025, will have up to 24 gates in order to address increasing congestion at DFW, as well as offer future growth opportunities for American and over two dozen other airlines. DFW has more than 1,000 daily departures to 250 cities, and that connectivity is often cited as a key factor in corporate expansions in North Texas.

AMERICAN AIRLINES & DFW AIRPORT STRIKE DEAL TO BUILD NEW $3 BILLION TERMINAL

LODGING MARKET OVERVIEW


The other two extended-stay offerings in the market are over 20-years old. Additionally, the Staybridge Suites will benefit from its strong brand affiliation and modern amenities. Given the high concentration of extended-stay corporate demand generators in the area, hotel ownership/management should be able to implement aggressive sales tactics and position itself to be a RevPAR leader in the market

STR REVIEWThe subject site is in the Bedford/Grapevine submarket of Dallas, which comprises a diverse mix of lodging facilities that range from branded, select-service hotels to smaller budget properties. The anticipated competitive set for the Staybridge Suites consists of a Homewood Suites by Hilton, Courtyard by Marriott, TownePlace Suites by Marriott, Home2 Suites by Hilton, and Holiday Inn Express & Suites. We note that a proposed Fairfield Inn & Suites by Marriott and Avid by IHG are in the final planning stages of development in Bedford. Once open, the subject Staybridge Suites will have several advantages, most notably of which will be its age.


COMPETITIVE SET OPERATING STATISTICS

0.0

10.0

20.0

30.0

40.0

50.0

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120

2011 2012 2013 2014 2015 2016 2017 2018 YTD July'18

YTD July'19

Occ

upan

cy (%

)

Aver

age

Rate

/Rev

PAR

($)

Average Rate RevPAR Occupancy

YearAverage Daily

Room CountAvailable

Room Nights ChangeOccupied

Room Nights Change OccupancyAverage

Rate Change RevPAR Change

2009 413 150,745 — 78,027 — 51.8 % $90.67 — $46.93 —

2010 413 150,745 % 83,267 6.7 % 55.2 85.93 (5.2) % 47.47 1.1 %

2011 413 150,745 99,423 19.4 66.0 84.89 (1.2) 55.99 17.9

2012 413 150,745 88,928 (10.6) 59.0 87.59 3.2 51.67 (7.7)

2013 413 150,745 93,847 5.5 62.3 87.03 (0.6) 54.18 4.9

2014 413 150,745 99,086 5.6 65.7 89.82 3.2 59.04 9.0

2015 413 150,745 107,428 8.4 71.3 95.87 6.7 68.32 15.7

2016 413 150,745 117,026 8.9 77.6 99.55 3.8 77.28 13.1

2017 413 150,745 114,914 (1.8) 76.2 99.54 (0.0) 75.88 (1.8)

2018 413 150,745 109,659 (4.6) 72.7 99.42 (0.1) 72.32 (4.7)

YTD July '18 473 100,359 — 74,807 — 74.5 % 98.64 — 73.52 —

YTD July '19 546 115,659 15.2 % 85,471 14.3 % 73.9 98.87 0.2 73.07 (0.6)

SOURCE: STR


HOTELCOURTYARD BY MARRIOTT FORT

WORTH/BEDFORD

HOLIDAY INN EXPRESS & SUITES DFW WEST

HURST

HOME2 SUITES BY HILTON BEDFORD

DFW WEST

HOMEWOOD SUITES BY HILTON

BEDFORD

TOWNEPLACE SUITES BY

MARRIOTT FORT WORTH BEDFORD

Address 2201 Airport Fwy 820 Thousand Oaks Drive 1916 Forest Ridge Drive 2401 Airport Freeway 2301 Plaza Parkway

City, State 2201 Airport Fwy 820 Thousand Oaks Drive 1916 Forest Ridge Drive 2401 Airport Freeway 2301 Plaza Parkway

Key Count 145 100 100 83 85

Indoor Meeting Space 1,382 1,670 1,100 1,196 -

FACIILITIES & AMENITIES

Guest Laundry Area; Outdoor Swimming

Pool; Fitness Center; Indoor Whirlpool

Business Center; Guest Laundry Area; Indoor

Swimming Pool; Fitness Room; Market Pantry

Business Center; Outdoor Swimming Pool;

Fitness Room; Market Pantry; Outdoor Patio & Barbecue Area; Outdoor

Patio & Fire Pit

Business Center; Guest Laundry Area;

Concierge; Room Service; Gift Shop; Outdoor Swimming

Pool; Fitness Center; Indoor Whirlpool

Business Center; Guest Laundry Area;

Fitness Center; Indoor Whirlpool

Distance from Subject Property (miles) 0.2 3.6 0.9 0.1 0.2

Trip Advisor Rating 6 of 10 3 of 5 4 of 10 7 of 10 3 of 10

COMPETIVE SET OVERVIEW

37LODGING MARKET OVERVIEW

FINANCIAL OVERVIEW


39

Undistributed Expenses

Department Revenues and Expenses

Management Fees

Non-Operating Income & Expenses

• Administrative & General expenses have been normalized at $2,114 per available room (PAR) in 2023/24, projected to increase by 3% per annum thereafter.

• Information & Telecommunication Systems expenses have been normalized to $453 PAR in 2023/24, projected to increase by 3% per annum thereafter.

• Sales & Marketing have been normalized at $755 PAR in 2023/24, projected to increase by 3% per annum thereafter.• Franchise fees are assumed to be 8.5% of gross rooms revenue based on industry comparable Staybridge Suites franchise agreements.• Property Operation & Maintenance expenses have been normalized at $906 PAR in 2023/24, projected to increase by 3% per annum

thereafter.• Utilities expenses have been normalized at $997 PAR in 2023/24, projected to increase by 3% per annum thereafter.

• Rooms expense has been forecast to stabilize at 22.0% of rooms revenue in 2023/24, increasing by the underlying rate of inflation, or by 3%, per annum thereafter.

• Other Operating Departments (OOD) expenses have been forecast to stabilize at 55.0% of revenues, increasing by the underlying rate of inflation, or by 3%, per annum thereafter.

HVS expects the Staybridge Suites’ RevPAR penetration, relative to the competitive set’s index, to stabilize above a market-average level given the hotel’s product type, age, and brand affiliation.

• A 3.0% management fee is assumed per industry standards.

• Real Estate Taxes and Insurance are forecast to increase by 3% per annum starting in 2023/24.• A 4.0% FF&E reserve is assumed per industry standards.

FINANCIAL OVERVIEW

PRO FORMA PROJECTIONSThe Pro Forma assumes the hotel will open in April 2021 and will appropriately ramp up its operation until stabilized in year 2023/24.


2019/20 2020/21 2021/22 2022/23 2023/24

$ % $ % $ % $ % $ %

Days Open 365 365 365 365 365

Number of Rooms: 70 70 70 70 70

Available Rooms 25,550 25,550 25,550 25,550 25,550

Rooms Sold 17,119 18,141 19,163 19,163 19,163

Occupancy 67.0% 71.0% 75.0% 75.0% 75.0%

Averate Rate $98.88 $104.67 $107.81 $111.05 $114.38

RevPAR $66.25 $74.32 $80.86 $83.28 $85.78

RevPAR Growth — 12.2% 8.8% 3.0% 3.0%

Operating Revenue

Rooms $1,692,599 97.5% $1,898,777 97.6% $2,065,923 97.7% $2,127,901 97.7% $2,191,738 97.7%

Other Operated Departments 39,266 2.3% 41,112 2.1% 43,034 2.0% 44,325 2.0% 45,655 2.0%

Miscellaneous Income 4,908 0.3% 5,139 0.3% 5,379 0.3% 5,541 0.3% 5,707 0.3%

TOTAL OPERATING REVENUE 1,736,773 100.0% 1,945,029 100.0% 2,114,337 100.0% 2,177,767 100.0% 2,243,100 100.0%

Departmental Expenses

Rooms $410,134 24.2% $1,898,777 97.6% $454,503 22.0% $468,138 22.0% $482,182 22.0%

Other Operated Departments 22,096 56.3% 41,112 2.1% 23,669 55.0% 24,379 55.0% 25,110 55.0%

TOTAL DEPARTMENTAL EXPENSES $432,230 24.9% 5,139 0.3% $478,172 22.6% $492,517 22.6% $507,293 22.6%

DEPARTMENTAL INCOME 1,304,543 75.1% 1,945,029 100.0%

Undistributed Operating Expenses

Administrative and General $135,031 7.8% $141,811 7.3% $148,005 7.0% $152,445 7.0% $157,022 7.0%

Information and Telecommunications Systems 28,935 1.7% 30,388 1.6% 31,715 1.5% 32,667 1.5% 33,647 1.5%

Sales and Marketing 48,225 2.8% 50,647 2.6% 52,859 2.5% 54,445 2.5% 56,079 2.5%

Franchise Fee 143,905 8.3% 161,415 8.3% 175,610 8.3% 180,880 8.3% 186,320 8.3%

Property Operation and Maintenance 57,871 3.3% 60,776 3.1% 63,431 3.0% 65,334 3.0% 67,295 3.0%

Utilities 63,658 3.7% 66,854 3.4% 69,774 3.3% 71,867 3.3% 74,024 3.3%

TOTAL UNDISTRIBUTED EXPENSES $477,625 27.5% $511,892 26.3% $541,394 25.6% $557,638 25.6% $574,388 25.6%

GROSS OPERATING PROFIT 826,918 47.6% 978,416 50.3% 1,094,771 51.8% 1,127,612 51.8% 1,161,420 51.8%

Management Fee $52,115 3.0% $58,358 3.0% $63,432 3.0% $65,336 3.0% $67,301 3.0%

INCOME BEFORE NON-OPERATING INCOME & EXPENSES 774,803 44.6% 920,059 47.3% 1,031,339 48.8% 1,062,276 48.8% 1,094,119 48.8%

Fixed Expenses

Property and Other Taxes $140,107 8.1% $144,311 7.4% $148,640 7.0% $153,099 7.0% $157,692 7.0%

Insurance 29,894 1.7% 30,791 1.6% 31,715 1.5% 32,667 1.5% 33,646 1.5%

TOTAL NON-OPERATING INCOME AND EXPENSES $170,002 9.8% $175,102 9.0% $180,355 8.5% $185,766 8.5% $191,339 8.5%

EBITDA 604,801 34.8% 744,957 38.3% 850,984 40.2% 876,510 40.2% 902,780 40.2%

Replacement Reserve $34,743 2.0% $58,358 3.0% $84,577 4.0% $87,115 4.0% $89,734 4.0%

EBITDA LESS REPLACEMENT RESERVE 570,058 32.8% 686,599 35.3% 766,407 36.2% 789,396 36.2% 813,046 36.2%

FIVE YEAR PRO FORMA

Hotel Advisory, LLC ("HVS Brokerage & Advisory"), a Texas licensed real estate broker

James RebullidaAssociateHouston

+1 (713) [email protected]

Eric GuerreroManaging Director

Houston+1 (713) 955-0012

[email protected]

You’ll find a wealth of hospitality knowledge at hvs.com

808 Travis Street Suite 1635 Houston, TX 77002

For more information and to view our current listings, visit: hvs.com/brokerage/listings

Documents

Confidential Offering Memorandum€¦ · This Offering Memorandum has been prepared by HVS for use by a limited number of recipients. All information contained herein has been obtained