The real estate investment platform Crowdstreet is making a last call for its ABZ Airport Holiday Inn offering, a value-add 121 room hotel near the Albuquerque, New Mexico Airport.
Albuquerque is a growing market in the American sunbelt that offers beautiful natural scenery, a mild climate and easy access to several highly desirable ski resorts. The project sponsor, Terrapin Investments, is seeking $4,786,742 in investor equity.
This money will be combined with sponsor equity to give investors and Terrapin full ownership of the hotel at a price just above $75,000 per room. The price alone creates an upside because the price for similar assets is currently floating between $85,000-$115,000 per room.
Although the rooms include some modern touches like flat-screen TVs, the project sponsor believes this hotel has not reached its full potential because of inattentive ownership.
The current replacement cost on a new, fully functioning Holiday Inn hotel in the Albuquerque area is roughly $145,000 per room. With that number in mind, Terrapin investments is very bullish on the project’s upside because its budget calls for a $24,000 per room renovation project. When added to the hotel’s purchase price, that creates a total investment cost of $100,000 per room, which is a significant saving on the current replacement cost.
Terrapin also owns several hotels in the area, including a Homewood Suites next door, which has been enjoying high occupancy and room rates since the property was acquired. In fact, the Homewood Suites is performing so well that part of Terrapin’s plan for the ABQ Holiday Inn is using it to accommodate guests they can’t book at its existing Albuquerque properties.
- Minimum investment: $25,000
- Projected hold period: 4 years
- Projected internal rate of return (IRR): 16.6%
- Targeted equity multiple: 1.8x
- Targeted average cash yield: 8%
Another important consideration for investors is that the sponsor has acquired the loan with an interest rate cap and no prepayment penalty. Currently, the other Terrapin hotel assets in the area are achieving very high net operating income (NOI) numbers; numbers that Terrapin believes it can match at ABQ.
Offers must be submitted by June 1, 2022 and funded by June 3, 2022.
Find more real estate investment offerings on Benzinga’s Alternative Investments Hub.
About the Project Sponsor
Terrapin Hospitality is an investment company that focuses on upgrading and improving revenue at hotels. They currently operate six different hotels in the Albuquerque area, which means the ABQ Holiday Inn will be in a market where Terrapin has already made several successful investments.
The company was founded in 1998. Since then, Terrapin has grown steadily, and it currently manages over 10,000 hotel rooms across 85 hotels in 14 different states.
Photo: Courtesy of CrowdStreet