294 | She is a Hotel Investor: What She Has a Deal can teach every hotel investor

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SHaD SQUAD: Members of She Has a Deal competing teams, team coaches and program founder Tracy Prigmore, front, center, celebrate the success of the program’s inaugural pitch competition on Oct. 24 at the Hilton McLean Tyson’s Corner Hotel in McLean, Virginia.

Investment fund to include winning project and two other developments pitched in the inaugural competition

The three women who make up the team called Datcher will soon become vested hotel owners thanks to the $50,000 in equity they won on Oct. 24 in She Has a Deal’s inaugural pitch competition held in McLean, Virginia.

Besides owning equity in a fund that will help finance their $27.4 million proposed project in downtown Detroit, the women will also be vested in projects that were pitched in the competition.

Tracy Prigmore, creator of She Has a Deal and founder and CEO of TLTSolutions, a hotel investment company, said the winning equity will be put toward a fundraising project for The Strait, which is Datcher’s project, plus two other projects – LodgingGo’s proposal to acquire and reposition a luxury property in New Orleans into a 90-room upscale hotel called The Brick House, and Fernweh Project’s ground-up development of a 135-room Hyatt Place in San Jose, California.

“We hope that particular fund will acquire at least the three projects,” Prigmore said.

While She Has a Deal pitch competition brought forth proposals for very real projects, Prigmore explained the contest was a didactic exercise in hotel investment with the goal of teaching contestants what goes into developing and financing a hotel.

As most hotel owners know, a deal is not done until an agreement is inked.

And, as most hotel developers also know, anything can happen to derail a prospective deal.

No matter what happens to Datcher’s idea, the team members will have ownership in hotel projects financed by the fund, Prigmore said.

Currently, only The Brick House in New Orleans has advanced beyond the idea stage. TLTSolutions has initiated a letter of intent to acquire the building, Prigmore said.

The next step, she said, is to recruit more investors for the fund, including big money such as institutional capital that can move the needle on getting these deals done.

In this article, Long Live Lodging reports on Datcher’s project as well as the other two hotels earmarked for the investment fund.

MONEY MAKERS: The Strait is an 80-room boutique hotel in Detroit proposed by members of Datcher, the winning team in She Has a Deal’s Oct. 24 inaugural pitch competition. Datcher presented the $27.4 million proposal that included various profit centers besides rooms as shown in this slide.

The Strait

Lera Covington is captain of Datcher, which won the competition. Her teammates are Kristen Collins and Joanne Angbazo. Covington will graduate in December from Cornell Baker Program in Real Estate.

Collins and Angbazo are graduates of the program. And all three women are members of Cornell Real Estate Women, which is where they learned about She Has a Deal.

Their team is named for Jane Eleanor Datcher, who in 1890 was the first African American woman to earn an advanced degree from Cornell University.

Their 80-room proposed project, called The Strait, is a $27.4 million adaptive re-use in downtown Detroit.

The building is the 105-year-old Historic First Independence Bank on West Michigan Avenue. In the 1950s, the top six floors were removed, reducing the structure to two above-ground floors and two basements.

The owner is Basco, which listed it for sale at $11 million, Curbed Detroit reported in April.

To transform the long-vacant landmark into a local destination and generate revenue beyond rooms, Datcher’s project includes adding six stories of rooms to the base structure. They would add F&B and entertainment programming to the bottom two floors (where the bank vault remains intact) and the basement and sub-basement.

“We really went into the competition wanting to do something fresh,” Covington said. Detroit’s “rich cultural history gave us the ability to do some unique things with our programming and curate the experience that will draw guests but also be a community fixture for residents.”

She Has a Deal judges praised Datcher’s presentation, especially its capital stack that showed the team left no stone unturned in finding sources of equity that would require less investor equity and therefore generate a stronger return.

In addition, the property sits in an Opportunity Zone, a federal program aimed at reviving moribund local economies by allowing commercial real estate investors to forestall paying tax on capital gains rolled into a development or redevelopment project.

CAPITAL SOURCES: The varied sources of equity and financing comprise Datcher’s capital stack, which judges say propelled the proposal to the winning category during She Has a Deal’s inaugural pitch competition on Oct. 24 in McLean, Virginia.

Besides a conventional bank loan and an SBA 504 loan, that would provide nearly $19 million, the team found nearly $5 million in equity through historic tax credits and two sources of financing from the state of Michigan – a community development revitalization grant of $1.5 million and a Commercial Property Assessed Clean Energy or CPACE loan of $1.2 million.

Investors would be asked to commit $4 million.

Covington said the capital sources would generate at least a 44 percent internal rate of return on investment.

Included in the proposed capital stack was the $50,000 in equity from She Has a Deal. Prigmore said every team included the equity prize as a funding source in their proposals. The whole amount is not going directly to any one project but rather into a fund that will build equity for at least three developments.

WATCH: FIRST PITCH COMPETITION: Watch She Has a Deal’s inaugural pitch competition held on Oct. 24 at the Hilton McLean Tysons Corner Hotel in McLean, Virginia, where five teams detailed their proposed projects to a panel of judges in a live and virtual event.

San Jose Hyatt Place

Datcher was not the only winner in She Has a Deal’s pitch competition. Fernweh Partners was the runner-up, winning $5,000 in cash.

The team also won the Viewer’s Choice Award.

The event was held at the innovation center in the Hilton McLean Tysons Corner Hotel where a live audience gathered and a media team streamed the event online for a virtual audience.

Prigmore said members of Hilton’s media team were laid off because of the coronavirus pandemic, but a few volunteered their time to help She Has a Deal go off without a hitch.

BUSINESS PROPOSITION: Fernweh Partners, a runner-up in She Has a Deal pitch competition on Oct. 24 in McLean, Virginia, proposed a ground-up build of a Hyatt Place hotel in San Jose, California, also known as Silicon Valley. The hotel will cater to business travelers. This slide is from the team’s presentation.

Fernweh is a German word that’s pronounced fern-vee. It means farsickness or the longing to visit far-off places.

The members that make up Fernweh Project are recent graduates of San Diego State University’s School of Hospitality and Tourism Management.

Team captain is Viviana Wilkins, 27, a master’s graduate. Her cohorts are Meaghan Carfrey, 35, a graduate of the master’s program, and Nikki Gonzales, 22, who has a bachelor’s degree.

The women began to scout prospective development opportunities throughout California and landed in San Jose, otherwise known as Silicon Valley, which is 500 miles north of San Diego.

They found a vacant site primed for ground-up development of a $41.4 million Hyatt Place. The project is a joint venture with NorthStar Hotel Development Group, which owns the land.

What makes the JV apropos is that NorthStar Hotel Development is women-owned and led. Shannon Shackerley-Bennett is CEO. Elsa Nguyen is CFO and founder of Sunrise Development, a sister company of NorthStar Hotel Development Group. Kelly Smith is director of entitlements.

Prigmore said the 135-room project is one of three in She Has a Deal’s first development fund.

PROPOSED REPOSITIONING: The team of LodgingGo proposed the repositioning of a luxury hotel in New Orleans into an upscale property befitting Hilton’s Tapestry Collection of upscale hotels. Team members Regina Yoo and Eng Sou Ea plan to change the hotel’s name to The Brick House. The acquisition and rebranding is expected to cost $14 million. The project is part of She Has a Deal’s new investment fund. Tracy Prigmore, creator of She Has a Deal and founder and CEO of TLTSolutions, a hotel investment company, said TLTSolutions will soon sign a letter of intent to acquire the property.

The Brick House

The coronavirus pandemic and subsequent downturn in the U.S. lodging industry forced every team to redo their proposals numerous times as events unfolded and uncertainty persists.

While both Datcher and Fernweh Partners stuck to their original plans for the most part, the team of LodgingGo made a wholesale change of its plans.

The women who comprise LodgingGo are Regina Yoo, a 21-year-old senior in the hotel development program at NYU, and Eng Sou Ea, 22 and a recent graduate of the program who works for Urbanland Asia Investment Co. in Phnom Penh, Cambodia.

Yoo appeared in person at the competition while Ea participated remotely.

Originally, months before the pandemic emerged, Yoo and Ea had planned on pitching a boutique hotel in Brooklyn. But, because of the coronavirus’s devastating impact on New York City and its hotels, the teammates decided to regroup and come up with another project to pitch at the She Has a Deal final.

What they came up with put them on the map.

The Brick House would be the new name of an existing 90-room hotel that would undergo upgrades and a repositioning as a boutique hotel in Hilton’s Tapestry Collection, a soft brand. The project would cost $14 million.

Currently, the property is called The Mercantile Hotel. It is an adaptive reuse of a 128-year-old sugar refinery building in New Orleans’ Warehouse District. It was fully renovated last year as a luxury hotel.

Yoo and Ea said the business is underperforming and they believe because Tapestry is an upscale brand its lower rates would increase business.

While the Brooklyn hotel would have catered to both local “staycationers” and international visitors, the New Orleans project is geared toward domestic travelers – a demographic that has buoyed many leisure destination markets during the pandemic.

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