Investment Details
  • Location Boston, Massachusetts
  • Investment Type Preferred Equity 506(b)
  • Property Type Hotel
  • Distribution Schedule Quarterly
  • Targeted Hold 3 Years
  • Targeted IRR 8.00 - 10.00%
  • Targeted Cash on Cash 9.00%
  • Total Transaction Size $13,200,000
  • Minimum Investment $10,000

Beacon Hill Hotel & Bistro Boston, Massachusetts

 Confidential Private Placement Memorandum - February, 2016

 This property is no longer open for investment. In the future, shares may appear on the exchange.

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About This Investment

The Beacon Hill Hotel & Bistro is irreplaceable real estate. Located in Boston's historic Beacon Hill neighborhood, the Property features 13 guest rooms and an award-winning 80-seat, full-service restaurant. The Property is situated in the heart of Boston, just steps from the Boston Public Garden, Boston Common and the Massachusetts State House.

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Why We Invested In This Deal


Priority Equity

We structured this investment as priority equity.  Priority investors are paid before any other investor and second only to the senior lender, reducing our overall risk. 

Location and Access

The Hotel is located along Beacon Hill's busiest thoroughfare, Charles Street, and is surrounded by popular retail boutiques, unique restaurants and a variety of guest and resident amenities. The Hotel is also walking distance to Massachusetts General Hospital, Mass Eye & Ear, Shriners Hospital and Schepens Eye Research Institute. The Property is easily accessible to public transportation via the MBTA Red and Green lines, both of which are just a few minutes' walk away, and is also proximate to major highways including Storrow Drive, the Massachusetts Turnpike (I-90) and Interstate 93.

High Barriers to Entry

The Beacon Hill neighborhood has one of the highest barriers to entry in Boston due to its dense residential development, large number of historic buildings, extreme lack of vacant land and rigorous development regulations. These factors all contribute to making additions to supply highly unlikely.

Consistent Operating History

The high-quality hotel is well-established and currently generates a solid in-place income. The award-winning hotel bistro is also among the city’s most popular restaurants for breakfast, lunch and dinner.

Sponsorship and Management

Saunders Hotel Group (SHG) is a fourth generation hospitality operator comprised of an experienced management team that will manage the day-to-day operations of the hotel. SHG is known for its local expertise, best-in-class customer service and strategic acquisition, turnaround, long-term and hands-on management.

Offering Summary

Acquire Real Estate is pleased to offer an investment opportunity in the Beacon Hill Hotel & Bistro, located at 25 Charles Street, Boston, Massachusetts (“Property” or “Hotel”).  The Hotel was recently purchased by an investment syndicate sponsored by the Saunders Hotel Group (“SHG”, “Sponsor”).  Acquire 25 Charles LLC (the “Company”) owns 26.41% of the Membership Interests in the Sponsor’s investment syndicate.

Investment Entity Acquire 25 Charles LLC (the “Company”)
Investment Entity Manager Acquire Advisory LLC (the “Manager”)
Offering Type Preferred Equity
Offering Amount $1,050,000
Ownership Interest in Sponsor Syndicate 26.41%

Acquire Real Estate Investor Projected Returns

Avg Cash on Cash (average annual cash on cash throughout investment period)  9.0%
Total Distributions $1,280,000
Total Profit $248,000

Overview

The Beacon Hill Hotel & Bistro is a full-service, 13-room boutique hotel located in Boston’s highest barrier-to-entry submarket: Beacon Hill. This trophy asset is located in the heart of the historic Beacon Hill neighborhood and is proximate to numerous fine-dining and entertainment options, multiple area hospitals, Boston’s Financial District and the city’s Back Bay neighborhood.

The Property was originally developed in phases between 1828 and 1850 and has operated as an independent boutique hotel. In 2000, the Hotel underwent an extensive $5 million renovation from the foundation up, and in 2011 all 13 guestrooms were completely renovated. The recent and extensive renovations to the Property mitigate the need for substantial capital improvements for the current Sponsor (Saunders Hotel Group) and will allow SHG to allocate money toward improvements to strongly enhance the guestroom product and support room revenue growth.

SHG will also focus on creating additional revenue streams from repositioning and rebranding the Hotel’s popular restaurant, securing local corporate business relationships and enhancing marketing efforts for both the hotel and restaurant.

Investor Returns

This calculator predicts your cash flow based on your initial investment and the targeted returns for the property. The output is based on an investment made on day one of the offering.

Returns
Total Proceeds
Total Profit
Average Cash On Cash
Internal Rate of Return
Equity Multiple
Ownership
Total Basis
Legal Fees
Percent Ownership
* The return of capital fee is only processed once the investor receives a full return of initial capital, excluding operating distributions.

Property Description

Property Description

The Beacon Hill Hotel & Bistro is a full-service boutique hotel comprised of a two- to five-story building, 13 guestrooms and an award-winning full-service restaurant. Originally developed in phases between 1828 and 1850, the hotel is in excellent condition having undergone a $5 million overhaul in 2000 that joined the two original townhouses and completely renovated the interior from the foundation up. In 2011, all 13 guestrooms were renovated to include: new furniture, fixtures and equipment (FF&E); paint; art; carpet; and lighting.

Property Summary  
Address 25 Charles Street, Boston, MA 02114
Date Opened 1828/1850
Renovations

1999-2000: Complete Renovation

2011: Room Renovation

Hotel Management Saunders Hotel Group (SHG)
Floors Two-Five Stories
Guestrooms 13, including one suite
Amenities High speed internet, flat-screen TVs, 24-hour room service, concierge, rooftop terrace, laundry and dry cleaning services
Food & Beverage:  
Beacon Hill Bistro Full-service restaurant serving breakfast, lunch and dinner. Breakfast and lunch have an American/International flavor, and dinner has a French accent
4,200 SF (80 person capacity)
Meeting Facilities Private Dining Room. 750 SF, 40 person capacity

Capital Expenditures

The prior owners of the Hotel were proactive in their approach to the allocation of capital for repairs and maintenance, in particular to the envelope and foundation of the building. These previous expenditures and the detailed upkeep will allow for the current Sponsor to allocate capital expenditures on the most important initiatives in order to streamline the Return on Investment (ROI) transition through branding, website and guestroom improvements. The Sponsor also has plans to close the existing restaurant in August 2016 for approximately three weeks in order to renovate the space and further establish it as one of Boston’s top dining establishments.

Investment

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Financials

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Market

Location Overview

The Beacon Hill Hotel & Bistro is located in the heart Beacon Hill, one of Boston’s oldest and most well-known neighborhoods. Charles Street, which runs from the Massachusetts General Hospital to the Public Garden, is Beacon Hill's main commercial area with a variety of retail boutiques, antique stores and restaurants serving both the residents of the neighborhood and its abundance of tourists. Beacon Hill is extremely pedestrian friendly, easily accessible by car (with access to both Interstate 90 and Interstate 93 via Storrow Drive) and is proximate to stops on both the MBTA Red and Green lines.

Greater Boston

Greater Boston is one of the largest metropolitan areas in the country with over 4.7 million residents. The city is expected to continue to strengthen its position among the country’s top real estate markets due to its low unemployment (4.3%), highly educated workforce and booming local economy. The city has the highest percentage of young professionals in the country with approximately 35.0% of the population between 20 and 34 years old. Unemployment rates in the city are at a new low of 3.7% compared to 5.5% for the nation, and employers in Boston are expected to create an additional 43,000 jobs in 2015.

Boston's economic growth is mainly driven by the education, technology and life sciences industries. Within the last few years there have been over 25,000 office jobs brought to the market by the life sciences and high tech sectors. Greater Boston is also home to 52 colleges and universities and has the highest percentage of college students in the United States.

List of Fortune 500 Companies Headquartered in the Greater Boston area

Company Revenue (Millions) Rank Location
Liberty Mutual $39,796 78 Boston
TJX $29,078 103 Framingham
EMC $24,440 121 Hopkinton
Raytheon $22,826 129 Waltham
Staples $22,492 133 Framingham
Global Partners $17,720 180 Waltham
Thermo Fisher Scientific $17,100 181 Waltham
State Street Corp. $10,687 278 Boston
Biogen $9,703 298 Cambridge
Boston Scientific $7,380 378 Marlborough

Transportation

Boston is easily accessible to residents and visitors alike via many different modes of transportation including: roadway, subway, regional rail, air and sea. The Massachusetts Bay Transportation Authority (MBTA) operates bus, subway, commuter rail and water ferry passenger services throughout the city and Greater Boston region. As such, Boston is ranked third in the country for public transit availability. Amtrak also operates passenger rail service to and from Boston to major northeastern cities. Boston is bisected by two major highways: Interstate 90 (The Massachusetts Turnpike), running east to west; and Interstate 93, running north to south.

Logan International Airport

Boston Logan International Airport is New England’s largest transportation center and ranks 18th in the nation in passenger volume. Logan Airport accommodates over 31 million passengers annually with more than 40 airlines that fly nonstop to over 100 domestic and international destinations. The airport employs approximately 12,000 workers and stimulates the regional economy by $7 billlion each year.

Tourism and Attractions

Convention Centers

Boston is home to two convention centers, the Boston Convention and Exhibition Center (BCEC) and the Hynes Convention Center, both operated by the Massachusetts Convention Center Authority (MCCA). Over the course of 2015 there were 262 events held between the two convention centers which brought in over 742,000 attendees, generated 632,433 hotel room nights and contributed a $784 million economic impact.

Attractions

Boston attracts more than 19 million visitors to the city each year that come to enjoy a variety of entertainment and tourist attractions including a multitude of historic sites, top-notch museums, high-end shopping, fine arts and a variety of sporting and musical events. Some of the city's most popular attractions include: The Freedom Trail, with over 4 million annual visitors each year; Faneuil Hall, with over 18 million visitors each year; and the Boston Common and the Public Garden. Boston is also home to three professional sports teams that play directly in the city including the NBA’s Boston Celtics and NHL’s Boston Bruins who play at TD Garden, as the Boston Red Sox who play at historic Fenway Park.

Boston Hotel Market Overview

The Greater Boston lodging market, comprised of 51,000 keys, is expected to see significant gains over the next several years according to PKF, a leading lodging consulting firm. RevPAR is projected to increase by 9% in 2015 and by 6.4% over the course of 2016. This increase in RevPAR is primarily driven by the projected growth of the Average Daily Rate (ADR) of 7.3% in 2016 with the growth trend extending through 2019 as well. Occupancy levels are projected to end 2015 strong at 76.5 percent, a record-level high.

Management

Saunders Hotel Group

As a fourth generation family owned and operated hotel management business, our daily life and mission is rooted in our people and our communities, both local and international. Every action we take thoughtfully considers value creation for our investors, outstanding service to our guests, and job satisfaction for our team members. For us this means best in class in customer service, best in class in employee recruitment, training, and retention, and ultimately best in class in financial performance. We believe in our mission and stand by our track record, reasons why we have an equity interest in every hotel we manage. 


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