DALLAS—As institutional investors, high-net worth family offices and sovereign-fund clients are turning to advisors during the current phase of the hotel real estate cycle, Solid Rock Group has recently led the acquisition of two separate transactions, bringing its hotel transactions year-to-date to more than $675 million. The Dallas-based investment and advisory firm, focused on the hospitality, healthcare and media sectors, is actively engaged in negotiations on behalf of investors for an additional $510 million.
Founded in 1991 by 45-year real estate veteran Greg Rice, Solid Rock Group has been involved in more than 190 properties and $8.25 billion of market value over the past 25 years. The firm’s hospitality practice specializes in high-end and luxury resorts and hotels. The firm’s most recent transactions involve the 122-room Anza boutique hotel in Calabasas, CA, and the 128-room Courtyard Atlanta Airport West in East Point, GA, on behalf of a private investment group for an undisclosed sum.
Solid Rock also has been retained to provide ongoing advisory and asset management services for the two properties on behalf of ownership. The deals were brokered by Eastdil Secured, LLC, and Hunter Hotel Advisors, respectively.
While the outlook for the hotel industry remains positive over the next few years, a number of unexpected occurrences, including BREXIT and the upcoming U.S. presidential election, can impact the industry, according to the firm. As a result, investors are looking for acquisition candidates with strong upside and the ability to withstand an economic downturn, noted Charlie Muller, who recently joined Solid Rock as a principal and managing director of its Dallas office. The firm has lately seen a significant uptick in the need for acquisition and asset management advisory services.
Due to the firm’s long-standing relationships with hotel owners, operators, investors and brokers, Solid Rock is able to identify, negotiate and close on both on- and off-market transactions, according to Muller. Solid Rock provides more than 100 combined years of hospitality expertise between its principals—Greg Rice, Salim Damji and Muller. The firm assists owners and investors to identify acquisition candidates that not only reflect the buyer’s investment strategies but also takes into consideration potential debt negotiations, flag and management company selection, operations oversight, and exit strategies that maximize return on investment.
“The acquisitions we are focused on have good fundamentals in real estate, and these fundamentals include looking at good growth markets, top-quality hotel brands—both full- and select-service assets—and hotel acquisitions at or below replacement costs,” said Damji.
Solid Rock’s clients continue to demonstrate an interest for hotels in the top 50 MSAs and seek advisory services to develop new properties and execute plans to optimize revenues while controlling costs. “We work closely with our clients and help them develop an investment strategy,” said Muller. “We have a well-developed team that has experience underwriting, acquiring and improving hotels. Unique to Solid Rock’s platform is our asset management team, steeped in hotel operations background. Understanding every cycle of real estate is important.”
Located in an affluent suburb of Los Angeles, the upscale Anza boutique hotel is surrounded by a number of dining, retail and business office outlets and is adjacent to the 101 Ventura Freeway. Demand generators include the 215,000-sq.-ft. Commons at Calabasas, a regional lifestyle center and entertainment destination, and the Warner Center Office Concentration in neighboring Woodland Hills, the corporate and commercial hub of the San Fernando Valley.
Through the firm’s established relationships with national, regional and local banks, Solid Rock negotiated a long-term loan for the hotel with “historically attractive rates, which will enhance returns,” Muller said. An analysis indicated that the property will benefit from strategic capital improvements, enhanced asset management and greater focus on marketing and operating margin control.
The improvements are expected to commence in the fourth quarter with a targeted completion date of the second quarter 2017.
Situated three miles from Hartsfield-Jackson International Airport, the Courtyard Atlanta Airport West is just a 10-minute drive from downtown Atlanta. Across the street from the more than 1.2-million sq. ft. of retail space Camp Creek Marketplace, the hotel is situated within Camp Creek Pointe, at the entrance of Camp Creek Business Center, an industrial development of four-million sq. ft. of space.
The four-story hotel features a recently renovated lobby and guestrooms, the Courtyard Bistro & Bar, 24-hour fitness and business centers, an outdoor pool and complimentary wireless and parking. Additionally, the Courtyard provides nearly 2,000 sq. ft. of meeting space that can accommodate 150 people.
The firm is working with a new management company and the brand to implement an effective product improvement plan. Muller stated, “The Atlanta airport submarket is strong, and the hotel’s close access to downtown Atlanta gives us greater demand generators, positioning the hotel well in all phases of the real estate cycle.” HB