Investment Details
  • Location Various
  • Investment Type Equity 506(b)
  • Property Type Hotel
  • Distribution Schedule Quarterly
  • Targeted Hold 5 - 7 Years
  • Targeted IRR 16.00 - 20.00%
  • Targeted Cash on Cash 9.00 - 12.00%
  • Total Transaction Size $158,000,000
  • Minimum Investment $5,000

Mid-Atlantic Hotel Portfolio Various

 Confidential Private Placement Memorandum - January, 2016

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

Photos

Franklin Hotel 1 Franklin Hotel 2 Franklin Hotel 3 Sheraton Ballroom Sheraton Lounge Sheraton Raleigh Sheraton Fitness Center Sheraton Pool Sheraton Lobby Sheraton Jimmy V's 1 Sheraton Jimmy V's 2 Sheraton Jimmy V's 3 Sheraton Jimmy V's 4 Sheraton Double Sheraton Executive Suite Sheraton Presidential Suite Sitting Area Sheraton Presidential Suite Bedroom Sheraton King Room

About This Investment

Acquire Real Estate is pleased to offer an investment opportunity in The Mid-Atlantic Hotel Portfolio (“Properties”, "MAHP" or “Portfolio”).  The Portfolio was recently purchased by an investment syndicate sponsored by The Buccini/Pollin Group (“Sponsor”).  Acquire Mid-Atlantic Hotels LLC (the “Company”) owns 0.902% of the Membership Interests in the Sponsor’s investment syndicate.

Investment Entity Acquire Mid-Atlantic Hotels LLC (the “Company”)
Investment Entity Manager Acquire Advisory LLC (the “Manager”)
Offering Type Equity
Offering Amount $420,000
Ownership Interest in Sponsor Syndicate 0.902%

Acquire Real Estate Investor Projected Returns

Avg Cash on Cash (average annual cash on cash throughout investment period)  11.0%
IRR 18.0%
Equity Multiple 2.1

Executive Summary

The Mid-Atlantic Hotel Portfolio is a four-property portfolio totaling 809 keys. Three of the portfolio’s hotels are located in the Greater Philadelphia region and one hotel is located in Raleigh, North Carolina. The Portfolio is the combination of two acquisitions: the three Pennsylvania assets were acquired off-market due to the Sponsor’s (Buccini/Pollin Group) relationship with the seller, and the fourth hotel in Raleigh was awarded as part of a brokered process, with the Sponsor being selected due to its sterling reputation in the hospitality industry.

The Pennsylvania hotels consist of one property in Center City Philadelphia—formerly the Omni at Independence Park now The Franklin Hotel at Independence Park—and two properties in King of Prussia: the Crowne Plaza King of Prussia and the Fairfield Inn King of Prussia. The Sponsor believes the properties are being sold at a price that will allow for significant appreciation through renovation, repositioning and focused management. Representative of this strategy, the Philadelphia hotel was completely rebranded after acquisition to The Franklin Hotel at Independence Park, a modern luxury accommodation.

The Sheraton Raleigh, located in the heart of downtown Raleigh, underwent a series of strategic enhancements by the previous owner. The Sponsor will undertake the next phase of enhancements, including renovations to all common areas and guestrooms.

Portfolio Summary

Property Total Keys Purchase Price PIP Total Basis $ Per Key
Sheraton Raleigh 353 $47,850,000 $7,499,500 $55,349,500 $156,797
The Franklin Hotel at Independence Park 150 $32,500,000 $7,121,250 $39,621,250 $264,142
King of Prussia* 306 $49,500,000 $4,995,433 $54,495,433 $178,090
Total 809 $129,850,000 $19,616,183 $149,466,183 $184,754

*Adjacent 44,000 square foot retail building acquired as part of the transaction

Investment Highlights

Current Cash Flow with Potential Upside

The Portfolio is expected to provide strong annual cash flow with the potential to achieve additional returns upon execution of planned renovations, management changes and the rebranding of the Philadelphia hotel.

Strong Performing Asset Class and Submarkets

Nationally, RevPAR increased 8.3% in 2014, the largest growth since 2005. The Raleigh/Durham/Chapel Hill market experienced 11.5% RevPAR growth in the 2014 and the Philadelphia market experienced 4.7% RevPAR growth.

Strong Sponsorship

The Buccini/Pollin Group (BPG) is one of the largest independent hotel owners in the country with 26 internationally branded hotels. The majority of BPG’s hotels are located on the East Coast giving BPG significant experience with East Coast market dynamics.

Hotel Management

The Portfolio will be managed by Pollin/Miller Hospitality Strategies, Inc. (“PMHS”), the hotel management affiliate of BPG which manages all of its hospitality assets as well as third-party engagements. PMHS is a hotel management and hotel real estate investment company headquartered in Washington, DC that provides development, technical consulting, on-site management and accounting expertise. PMHS has participated in the development, acquisition and renovation of 28 hotels with a market capitalization exceeding $1 billion. Further details regarding PMHS can be found at www.pmhs.com.

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

  Sheraton Raleigh The Franklin Hotel at Independence Park Crown Plaza King of Prussia Fairfield Inn King of Prussia
Address 421 South Salisbury Street, Raleigh, NC 27601 401 Chestnut Street, Philadelphia, PA 19106 260 Mall Boulevard, King of Prussia, PA 19406 258 Mall Boulevard, King of Prussia, PA 19406
Date Opened 1982 1989 1968 1968
Hotel Management PM Hospitality Strategies PM Hospitality Strategies PM Hospitality Strategies PM Hospitality Strategies
Union Status Non-Union Non-Union Non-Union Non-Union
Floors 17 Floors 13 Floors 5 Floors 5 Floors
Guestrooms:        
Total Rooms 353 150 226 80
# of Kingrooms 198 117 121 40
Avg SF 380sf 427sf 275sf 299sf
# of  Queen Rooms N/A N/A 99 N/A
Avg SF N/A N/A 275sf N/A
# of Double Rooms 149 30 N/A 40
Avg SF 380sf 435sf N/A 299sf
# of Suites 6 3 6 N/A
Avg SF 887sf 667sf 407sf N/A
Food & Beverage:        
Restaurants Jimmy V’s Osteria & Bar - Traditional comfort foods made with locally grown ingredients.  Serving breakfast, lunch and dinner 

Café Sienna – Open for breakfast features coffee and pastries
Azalea Restaurant - Regional cuisine served for breakfast, lunch and dinner with a stunning view overlooking Independence Park.

Lobby Lounge - serves drinks and light fare from mid-afternoon to midnight.
Stirling's Restaurant - Casual dining serving breakfast, lunch and dinner. 

Stirling’s Lounge - Bar bites and after-dinner drinks, opens at 4:00 pm nightly.
Complimentary breakfast
In-room dining Sunday-Thursday: 6:30 am-10pm, Friday & Saturday: 7am-11pm  24 hours a day Available 6:00 am – 11:00 pm Available 5:00 pm – 9:00 pm
Meeting and Function Space:        
# of Rooms 14 5 18 n/a 
Total SF 18,000 SF 3,500 SF 24,000 SF n/a
Parking Self-parking - $14/day Onsite parking - $8/hr or $28/day
Valet-parking - $38/day
525 complimentary parking spaces Complimentary on-site parking

Property Improvement Plan

Sheraton Raleigh

The Sponsor plans to implement the next phase of planned renovations which are set to include updates to guestrooms, corridors, meeting rooms, function space and the hotel fitness center.

The Franklin Hotel at Independence Park

The Sponsor has recently converted this hotel to Marriott’s lifestyle brand: Renaissance. BPG plans to re-concept the lobby/lounge/restaurant space and renovate the guestrooms, corridors and fitness centers to comply with the Renaissance brand standards.

Crowne Plaza King of Prussia

The Sponsor plans to selectively renovate guestroom soft goods, reconfigure the lobby restaurant and address renovations to the meeting and function spaces.

Fairfield Inn King of Prussia

The Sponsor plans to renovate all areas of the hotel as part of re-licensing the hotel with Marriott as a Fairfield. The breakfast area in the lobby will be expanded and a second elevator tower is planned.

LA Fitness Facility

Both King of Prussia hotels are located adjacent to LA Fitness. The Sponsor plans to improve/re-lease this space upon expiration of the current lease (December 2017) to bring the facility up to market rent.

Summary

Category Amount Per Key
Sheraton Raleigh    
Guestrooms $4,765,500 $13,500
Corridors $1,500,000 $4,249
Function Space $400,000 $1,133
Public Areas / Fitness $834,000 $2,363
Total $7,499,500 $21,245
The Franklin Hotel at Independence Park  
Guestrooms $4,500,000 $30,000
Corridors $1,000,000 $6,667
Function Space $250,000 $1,667
Public Areas $1,371,250 $9,142
Total $7,121,250 $47,475
Crowne Plaza King of Prussia    
Guestrooms $1,470,433 $6,506
Corridors $75,000 $332
Function Space $250,000 $1,106
Public Areas $800,000 $3,540
Total $2,595,433 $11,484
Fairfield Inn King of Prussia    
Guestrooms $1,000,000 $12,500
Corridors $450,000 $5,625
Function Space $0 $0
Public Areas $950,000 $11,875
Total $2,400,000 $10,619
Grand Total $19,616,183 $24,247

Investment

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Financials

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Market

National Market Overview

In 2014 the U.S. lodging industry had its largest growth in RevPAR since 2005, increasing 8.3% for the year. This was a result of a 3.6% gain in occupancy rates and a 4.6% rise in Average Daily Rate (ADR). There was also a 4.5% gain in demand and a below-average change in supply at 0.9%.

According to PKF Hospitality research, it’s expected that supply will outpace demand in late 2016 and 2017, but occupancy levels will remain above average.

Raleigh Overview

Location

The Sheraton Raleigh is located in the heart of downtown Raleigh, less than a block from the Raleigh Convention Center and only a 20-minute drive from the Raleigh-Durham International Airport (RDU). The hotel is located just minutes from the State Capital building and from numerous downtown attractions including museums, restaurants and nightlife. The Sheraton Raleigh is accessible from points west on I-40; points east via 64/264 to I-440; points south via US-1 north to I-40 east; and points north via US-1 south.

Regional Overview

The Sheraton Raleigh is located in Wake County in the Raleigh-Durham market. The Raleigh-Durham region is the third-best labor market in the country and has added approximately 14,000 jobs over the last year. The market has witnessed steady employment growth at 6.7% and has an unemployment rate of 5.3%. Since the beginning of 2015, over 30 companies have announced relocations or expansions in Wake County, accounting for 864 additional jobs and over $99 million in investment. As a result, the region continues to rank among the top locations in the U.S. for job satisfaction, hiring opportunities and cost of living.

The technology and life science sectors are strong in the Raleigh-Durham market with the Research Triangle (Raleigh, Durham and Chapel Hill) being the fourth market in the nation for tech jobs. This was led by a recent surge in funding for life science companies that boosted North Carolina’s start-up investment by 71 percent year over year. Since the beginning of 2015, the Research Triangle has added approximately 20,000 jobs and has maintained the lowest 12-month average unemployment rate in the state since 2007.

Raleigh

Raleigh is the capital of North Carolina and the second-largest city in the state with a population of approximately 440,000. The city is centrally located on the East Coast in Wake County, halfway between Florida and New York. Raleigh is accessible from I-40 and four additional major U.S. highways. This city is also proximate to I-85 and I-95.

Major Employers

Company No. of Employees
State of North Carolina 24,083
Wake County Public School System 18,554
IBM Corporation 10,000
WakeMed Health & Hospitals 8,422
North Carolina State University 7,876
Cisco Systems, Inc. 5,500
Rex Healthcare 5,300
SAS Institute, Inc. 5,232
GlaxoSmithKline 4,950
N.C. DHHS 3,800

Education

The Raleigh area is home to 10 universities and colleges along with numerous satellite campuses and for-profit institutions of higher education. These institutions see approximately 15,000 graduates each year. Among the most prominent universities and colleges are North Carolina State University, Meredith College, Shaw University, Saint Augustine’s University and Campbell Law School. With Raleigh being centrally located in the Research Triangle, the area’s academic research network is also enhanced by the presence of the University of North Carolina at Chapel Hill, Duke University and North Carolina Central University.

Transportation

Wake County is easily accessible to the Research Triangle and beyond primarily through I-40 and with a series of additional US Highways and Interstates including I-440 and I-540. As part of the North Carolina Department of Transportation’s Fortify Rebuild project, I-40 is currently undergoing construction to expand the roadway from three to four lanes.

Raleigh Union Station

The Raleigh Union Station, a new multi-modal transit station, is expected to open in 2017. The project’s $73 million Phase I will service national Amtrak routes and will include three levels of retail, restaurant and office space. When the project is fully complete, it will serve as a transportation hub for Amtrak, local and regional commuter rail, buses, taxis and bicyclists.

Raleigh-Durham International Airport

Raleigh-Durham International Airport (RDU) is located northeast of the town of Morrisville, just 10 miles outside of Raleigh. RDU accommodates over 9.5 million passengers annually with nine airlines offering over 400 flights a day. Terminal 1 recently underwent a complete renovation and was reopened in April 2014 with nine gates. Terminal 2 was built in two separate phases, with Phase II opening in October 2008 and Phase II opening in January 2011 to compete the $570 million terminal.

With the completion of renovations to Terminal 1 and the newer construction of Terminal 2, the majority of improvements identified in the 1994 Master Plan have been completed. The Airport Authority has authorized the preparation of a new Master Plan Study to help guide the future development at RDU and ensure that it continues to meet the growing demands of the region.

Tourism and Attractions

The Raleigh-Durham market has an abundance of entertainment options and tourist attractions ranging from historic sites and museums, shopping experiences, fine art offerings, professional and amateur sports and various major events. Over 14 million people visit the Raleigh area each year and contribute more than $1.13 billion to the local economy.

Some of the more popular sporting attractions include catching a NHL Carolina Hurricanes game at the PNC Arena; watching a Carolina Mudcats Single-A baseball game; or watching the Carolina RailHawks (men's pro soccer) at WakeMed Soccer Park. The region is also home to stock car racing and top-tier college athletics. The Duke Energy Center for the Performing Arts, which hosts concerts and various entertainment events, the North Carolina Museum of History, one of the premier history museums in the south, and Museum Park, which encompasses 164 acres of trails, fields and woodlands, round out the region’s most popular attractions.

Raleigh Convention Center

The Raleigh Convention Center opened in September 2008 and provides 212,000 square feet of rentable space, including a 150,000-square-foot exhibition hall, a 32,000-square-foot ballroom and 20 individual meeting rooms. The convention center hosts an average of 300 events per year and welcomes more than 440,000 visitors annually. The Raleigh Convention Center generates an average of $40 million per year in positive economic impact with visitors staying at hotels, eating at restaurants and purchasing various services. Convention center bookings contribute to an average of 60,000 hotel rooms per year in the Raleigh area, with this figure increasing steadily each year.

Hotel Market Overview

Wake County, where the Sheraton Raleigh is located, is home to more than 15,500 hotel rooms. The competitive set for the Sheraton Raleigh consists of six hotels in the Raleigh area totaling 1,710 keys. With no new supply projected in the Raleigh market, RevPAR for the competitive set is projected to continue to grow over the next five years.

Competive Set
Holiday Inn Raleigh Downtown
Hilton North Raleigh
Doubletree Raleigh Brownstone University
Embassy Suites Raleigh Crabtree
Renaissance Raleigh North Hills Hotel
Marriott Raleigh City Center
Doubletree Raleigh Cary

Competitive Set Statistics

  Occupancy ADR RevPAR % Change
YE 2009 58.7% $109.54 $64.30  
YE 2010 62.4% $111.62 $69.65 8.3%
YE 2011 65.1% $117.46 $76.47 9.8%
YE 2012 66.5% $122.15 $81.23 6.2%
YE 2013 67.4% $125.68 $84.71 4.3%
YE 2014 71.4% $131.29 $93.74 10.7%
2015 Estimate 72.0% $136.71 $98.43 5.0%
2016 Estimate 72.0% $142.17 $102.37 4.0%
2017 Estimate 72.0% $146.44 $105.44 3.0%
2018 Estimate 72.0% $150.83 $108.60 3.0%
2019 Estimate 72.0% $155.36 $111.86 3.0%

 Sheraton Raleigh Statistics

Year Occupancy ADR RevPAR % Change Penetration vs. Comp Set
YE 2009 58.3% $107.01 $62.43 N/A 97.1%
YE 2010 58.3% $109.66 $63.98 2.5% 91.9%
YE 2011 61.0% $119.03 $72.66 13.6% 95.0%
YE 2012 59.4% $125.87 $74.81 3.0% 92.1%
YE 2013 59.2% $128.27 $75.94 1.5% 89.7%
YE 2014 64.3% $140.06 $90.09 18.6% 96.1%
2015 Forecast 65.4% $144.50 $94.50 4.9% 96.0%
2016 Estimate 66.0% $148.90 $98.27 4.0% 96.0%
2017 Estimate* 68.0% $155.10 $105.47 7.3% 100.0%
2018 Estimate 69.0% $160.50 $110.75 5.0% 102.0%
2019 Estimate 69.0% $168.60 $116.33 5.0% 104.0%

*Post renovation 

Philadelphia Overview

The Franklin Hotel at Independence Park is centrally located near Philadelphia’s Old City District within walking distance to the Liberty Bell, U.S. Mint, Independence Hall and the Benjamin Franklin House. The property is just eight blocks from Philadelphia Convention Center—one of the largest convention centers in the U.S.—and proximate to numerous dining, shopping and entertainment offerings.

The hotel is easily accessible from the Delaware Expressway (I-95)—a principal thoroughfare for intercity traffic—and the Vine Street Expressway (I-676), which travels between I-76 and I-95 in Center City Philadelphia. In a 2015 study, Philadelphia was also ranked the fourth most walk-able city in the nation due to its efficient transportation options and compact City Center.

King of Prussia

The Crowne Plaza and The Fairfield Inn King of Prussia are both conveniently located across from the King of Prussia Mall—the second-largest shopping mall in the United States with over 25 million visitors each year. The hotels are located at the intersection of Mall Boulevard and Wills Boulevard, with easy access to the Pennsylvania Turnpike (I-276), the Schuykill Expressway (I-76) and the Veterans Memorial Highway (I-476).

Market Overview

The Philadelphia MSA

The Philadelphia region is located in the Northeast corridor of the United States just 80 miles southwest of New York City and 130 miles northeast of Washington D.C. The Philadelphia MSA is the sixth-largest metropolitan area in the country with a population over 6 million. This figure is expected to grow at annual rate of 0.3% over the next five years. On par with the region’s population growth, the number of households in the MSA has increased 0.4% annually over the past 10 years while the region’s cost of living is closely in line with the national base at 102%.

Economic Overview

The Philadelphia MSA has strong demographic characteristics with average and median income levels above the national average. The region also boasts a well-educated labor force and healthy employment growth. In 2015, job growth in the Philadelphia MSA saw a 1.1% increase in the non-farm workforce. As of October 2015, the region had an unemployment rate of 5.2% (slightly higher than the national rate of 5.0%) but an average annual income of $85,886, more than 14% higher than the national average.

The region’s median age has slowly declined over the past decade and is currently just one year higher than the national median at 38.0 years. The 25- to 44-year old demographic continues to make up a significant portion of the region’s population and the area successfully retains many of its college graduates from over 100 degree-granting colleges and universities nearby. Over 33% of the region’s population holds a four-year degree or higher (compared to the national level of 28.6%), and over 13% are working toward or currently have an advanced degree.

The region’s largest business sector is Education and Health Services, which currently employs 21.2% of the region’s workforce. The Professional and Business Services industry has also been one of the region’s fastest-growing industries with a 16.1% growth rate in the past 10 years.

Philadelphia MSA’s Largest Private Employers

Company No. of Employees Business Type
University of Pennsylvania and Health System 32,825 Education and Health Services
Thomas Jefferson University and TJUH System 13,462 Education and Health Services
Comcast Corp. 11,968 Professional and Business Services
Drexel University 9,927 Education and Health Services
Einstein Healthcare Network 9,000 Education and Health Services
Temple University 8,252 Education and Health Services
Wells Fargo 7,584 Financial Services
Independence Blue Cross 6,880 Education and Health Services
Crozer-Keystone Health System 6,320 Education and Health Services
AlliedBarton Security Services 5,246 Security Services
Verizon 5,100 Professional and Business Services
Aria Health 4,000 Education and Health Services

 Fortune 500 Companies

Rank Company City
28 Amerisource Bergen Chesterbrook, PA
44 Comcast Philadelphia, PA
86 DuPont Wilmington, DE
209 Aramark Philadelphia, PA
235 Lincoln National Radnor, PA
313 Crown Holdings Philadelphia, PA
315 Campbell Soup Camden, NJ
324 Universal Health Services King of Prussia, PA
362 UGI King of Prussia, PA
417 SLM Newark, DE
498 Airgas, Inc. Radnor, PA

Transportation

Philadelphia is crossed by the Delaware Expressway (I-95) and the Schuylkill Expressway (I-76) which are both principal thoroughfares for intercity traffic. The Vine Street Expressway (I-676) travels between I-76 and I-95 in Center City Philadelphia, and the Roosevelt Boulevard (US 1) carries crosstown traffic through northern Philadelphia.

Philadelphia's public transit system, the sixth-largest in the U.S., is mainly operated by the Southeast Pennsylvania Transportation Authority (SEPTA). SEPTA operates all five of the city’s major transit vehicles including buses, rapid transit, commuter rail, trolleys and the Philadelphia trackless trolley system. The main rail station of Philadelphia is 30th Street Station which provides access to 13 SEPTA regional routes and 11 national Amtrak routes. PATCO, a second regional rail line serving the area, connects Philadelphia to Camden, New Jersey and other nearby southern New Jersey suburbs.

Philadelphia International Airport (PHL)

The Philadelphia International Airport is one of the busiest airports in the world and one of the largest economic engines in all of Pennsylvania. PHL generates more than $14.4 billion in spending to the regional economy and accounts for more than 141,000 jobs. In 2014, PHL accommodated 30.7 million passengers (approximately 84,000/day), which included 4.5 million international passengers. Twenty-five airline carriers offer 550 daily departures to 131 cities, including 39 international destinations.

Over the last 15 years, PHL has invested $2 billion in capital improvements that saw the creation of two new terminals at Terminal F and Terminal A-West. Terminal F, completed in June 2001, is an 185,000 square foot facility consisting of 38 gates accommodating US Airways Express. The terminal hub was redesigned in November 2013 and features 20 new concession shops, a 300-seat food court and an enhanced bus shelter. Terminal A-West, completed in May 2003, is an international terminal with 800,000 square feet, four levels, three international boarding gates and spacious federal inspection and ticketing areas. Since 2001, PHL's gate capacity has increased by 94% from 65 to 126.

PHL also completed the Terminal D/E Connector in December 2008 which features a 14-lane security checkpoint and 10 food, beverage and retail stores. In February 2010 the $45-million Terminal E Expansion was completed and now features seven new aircraft gates, a 500-seat waiting area, 4,000 square feet of concession space, new restrooms and new permanent artwork.

Tourism and Attractions

Pennsylvania Convention Center

The Pennsylvania Convention Center opened in the heart of downtown Philadelphia in 1993. In recent years the center underwent a $700 million expansion that was completed in 2011. Today the convention center offers over 1 million square feet of saleable space and has the flexibility to host large trade exhibitions and conventions simultaneously. In 2014 the center hosted 520 meetings, events and conventions. This brought in an estimated 400,000 attendees who consumed close to 570,000 hotel room nights and generated an estimated $768 million in economic impact for the City of Philadelphia.

Attractions

The Greater Philadelphia region has an abundance of entertainment options and tourist attractions ranging from historic sites and museums, high-end shopping experiences, fine arts and entertainment offerings, and professional sporting and musical events. Over 40 million people visit Philadelphia each year, touring the region’s variety of historical sites and museums. Some of the most popular attractions include: The Independence Historical National Park, home to the Liberty Bell with over 3.5 million visitors each year; the Philadelphia Zoo, which welcomes more than one million visitors per year; and The National Constitution Center and Philadelphia Museum of Art, each of which attract over 800,000 visitors a year.

Philadelphia is also home to five professional sports teams that play within just a few miles of Center City at the South Philadelphia sport complex. This complex includes: the Wells Fargo Center, home to the Philadelphia 76ers and the Philadelphia Flyers; Lincoln Financial Field, home to the Philadelphia Eagles; Citizens Bank Park, home to the Philadelphia Phillies; and the Wachovia Spectrum, home to the Philadelphia Union.

Philadelphia’s economy is expected to continue to expand over the next five years with help from various events recently hosted and scheduled within the area. Recent events include the Papal visit in September 2015, the World Meeting of Families, the Forbes Under 30 Summit and the Army-Navy Game. The city will also play host to the Democratic National Convention in 2016.

Hotel Market Overview

Philadelphia Submarket

The competitive market for the Franklin Hotel at Independence Park primarily consists of four full-service hotel properties including some of the most luxurious hotels in Philadelphia: the Westin Philadelphia, the Hotel Palomar Philadelphia, the Radisson Blu Hotel and the Sofitel Philadelphia. With no new supply projected in the Society Hill submarket of Philadelphia, and new retail development proposed or underway nearby, RevPAR for the competitive set is projected to slowly increase over the next five years.

Competitive Set
Radisson Blu Warwick Hotel Philadelphia
Westin Philadelphia
Sofitel Philadelphia
Kimpton Hotel Palomar Philadelphia

Competitive Set Statistics

Year Occupancy ADR RevPAR % Change
YE 2010 76.2% $160.16 $122.04  
YE 2011 77.9% $181.94 $141.73 16.1%
YE 2012 80.5% $188.87 $152.04 7.3%
YE 2013 75.9% $190.36 $144.48 -5.0%
YE 2014 79.6% $198.74 $158.20 9.5%
2015 Estimate 80.0% $213.57 $170.85 8.0%
2016 Estimate 81.0% $223.59 $181.10 6.0%
2017 Estimate 81.0% $232.53 $188.35 4.0%
2018 Estimate 81.0% $239.50 $194.00 3.0%
2019 Estimate 81.0% $246.69 $199.82 3.0%

Franklin Hotel Statistics

Year Occupancy ADR RevPAR % Change Penetration vs. Comp Set
YE 2010 86.8% $149.55 $129.75 N/A 106.3%
YE 2011 86.0% $165.12 $142.01 9.5% 100.2%
YE 2012 89.3% $164.61 $147.06 3.6% 96.7%
YE 2013 85.4% $160.73 $137.22 -6.7% 95.0%
YE 2014 84.4% $164.94 $139.15 1.4% 88.0%
2015 Forecast 84.6% $173.70 $146.95 5.6% 86.0%
2016 Estimate 85.0% $174.70 $148.50 1.1% 82.0%
2017 Estimate* 85.0% $205.00 $174.25 17.3% 92.5%
2018 Estimate 85.0% $222.50 $189.13 8.5% 97.5%
2019 Estimate 85.0% $229.20 $194.82 3.0% 97.5%

*Operating as renovated Renaissance

King of Prussia Submarket

The competitive set for the Fairfield Inn King of Prussia consists of five hotels with a total of 722 rooms including the Best Western Plus, the Inn at King of Prussia, Holiday Inn Express & Suites King of Prussia, Hampton Inn King of Prussia, Comfort Inn Valley Forge National Park, and SpringHill Suites King of Prussia. Likewise the competitive set for the Crowne Plaza King of Prussia consists of six hotels with a total of 1,402 rooms. With no new supply projected in the King of Prussia submarket, RevPAR for the competitive set is projected to slowly increase over the next five years.

Crowne Plaza King of Prussia

Competitive Set
Radisson Hotel Valley Forge
Embassy Suites Philadelphia Valley Forge
Doubletree Philadelphia Valley Forge
Sheraton Hotel Valley Forge
Desmond Hotel
Hyatt House King Of Prussia

Competitive Set Statistics

Year Occupancy ADR RevPAR % Change
YE 2009 48.1% $126.18 $60.75  
YE 2010 57.0% $120.88 $68.90 13.4%
YE 2011 57.8% $124.51 $71.97 4.4%
YE 2012 60.4% $127.78 $77.18 7.2%
YE 2013 60.7% $130.73 $79.35 2.8%
YE 2014 62.1% $134.98 $83.82 5.6%
2015 Estimate 63.0% $135.71 $85.50 2.0%
2016 Estimate 63.0% $142.50 $89.77 5.0%
2017 Estimate 63.0% $146.77 $92.47 3.0%
2018 Estimate 63.0% $151.18 $95.24 3.0%
2019 Estimate 63.0% $155.71 $98.10 3.0%

Crowne Plaza Statistics

Year Occupancy ADR RevPAR % Change Penetration
YE 2009 67.1% $135.94 $91.18 N/A 150.1%
YE 2010 74.4% $134.95 $100.43 10.1% 145.8%
YE 2011 76.0% $139.88 $106.27 5.8% 147.7%
YE 2012* 72.3% $138.67 $100.20 -5.7% 129.8%
YE 2013 66.6% $133.08 $88.65 -11.5% 111.7%
YE 2014 66.0% $133.18 $87.91 -0.8% 104.9%
2015 Estimate 63.2% $143.80 $90.88 3.4% 106.3%
2016 Estimate 65.0% $147.80 $96.07 5.7% 107.0%
2017 Estimate 67.0% $151.90 $101.77 5.9% 110.1%
2018 Estimate 68.0% $157.10 $106.83 5.0% 112.2%
2019 Estimate 68.0% $161.80 $110.02 3.0% 112.2%

 *During the 2012 guest bathroom renovation, the Crowne lost demand to new (Hyatt House) and renovated/rebranded competitors (Sheraton and Doubletree)

Fairfield Inn 

Competitive Set
Best Western Plus The Inn @ King Of Prussia
Holiday Inn Express & Suites King Of Prussia
Hampton Inn Philadelphia King Of Prussia Valley Forge
Comfort Inn Valley Forge National Park
Springhill Suites Philadelphia Valley Forge King Of Prussia

Competitive Set Statistics

Year Occupancy ADR RevPAR % Change
YE 2009 61.6% $99.75 $61.43  
YE 2010 66.7% $103.24 $68.86 12.1%
YE 2011 60.2% $117.07 $70.48 2.3%
YE 2012 55.9% $117.46 $65.66 -6.8%
YE 2013 55.5% $114.15 $63.35 -3.5%
YE 2014 63.9% $108.67 $69.44 9.6%
2015 Estimate 63.0% $116.84 $73.61 6.0%
2016 Estimate 63.0% $122.68 $77.29 5.0%
2017 Estimate 63.0% $126.36 $79.61 3.0%
2018 Estimate 63.0% $130.15 $81.99 3.0%
2019 Estimate 63.0% $134.05 $84.45 3.0%

Fairfield Inn Statistics

 

Year Occupancy ADR RevPAR % Change Penetration
YE 2009 71.3% $125.42 $89.48 N/A 145.6%
YE 2010 77.9% $127.41 $99.24 10.9% 144.1%
YE 2011 75.6% $138.91 $105.05 5.9% 149.1%
YE 2012 74.2% $132.24 $98.18 -6.5% 149.5%
YE 2013 75.9% $128.95 $97.86 -0.3% 154.5%
YE 2014 74.4% $126.81 $94.30 -3.6% 135.8%
2015 Estimate 72.2% $128.10 $92.49 -1.9% 125.7%
2016 Estimate 68.0% $136.60 $92.89 0.4% 120.2%
2017 Estimate* 72.0% $144.00 $103.68 11.6% 130.2%
2018 Estimate 76.0% $151.30 $114.99 10.9% 140.2%
2019 Estimate 76.0% $155.80 $118.41 3.0% 140.2%

 *Post Renovation

Sales Comps

Raleigh Sales Comps

Date Property Name Rooms Total Basis Per Room
Existing        
Feb-15 Courtyard Chapel Hills 169 $29,600,000 $175,148
Aug-13 Marriott Raleigh City Center 400 $93,400,000 $233,500
Jul-09 Franklin Hotel 67 $15,300,000 $228,358
Nov-08 Homewood Suites by Hilton RTP 122 $20,100,000 $164,754
Total Existing   758 $158,400,000 $208,971

 Pennsylvania Sales Comps

Date Property Name Rooms Total Basis Per Room
Existing        
Pending Le Meridien 202 $66,030,000 $326,881
Pending The Latham Hotel 139 $40,000,000 $287,770
Mar-12 Rittenhouse Philadelphia 111 $42,000,000 $378,378
Dec-10 Sofitel Philadelphia 306 $87,000,000 $284,314
Sep-10 Westin Philadelphia 294 $145,000,000 $493,197
Sep-10 Embassy Suites Philadelphia Center City 288 $79,000,000 $274,306
Total Existing   1,340 $459,030,000 $342,560
Development        
Oct-12 Hotel Monaco 268 $88,440,000 $330,000
Oct-10 Hotel Palomar 230 $93,380,000 $406,000
Total Development   498 181,820,000 $365,100

Management

The Buccini/Pollin Group

The Buccini/Pollin Group is a privately-held, full-service real estate acquisition, development and management company with offices in Washington, DC, Wilmington, DE, Philadelphia, PA, and New York City.
Since 1993, Buccini/Pollin has developed and acquired hotel, office, residential, sports & entertainment, and retail properties throughout the Mid-Atlantic and Northeast having a value in excess of $4 billion. The Buccini/Pollin group currently has under management or development 26 hotels, 6 million square feet of office and retail space, over 1,200 residential units in 10 major communities, and multiple entertainment venues, including PPL Park, home of the Philadelphia Union Major League Soccer team. Buccini/Pollin’s 2,000 associates make a difference in our communities by supporting over 50 vital charities.


Location

Documents

Some information is confidential and only available to registered users.

Forum

Will I have to file tax return in those states?

Josh Klimkiewicz Commented on 1/19/2016 4:32 PM
Acquire will be filing the individual state tax returns on behalf of its members and we recommend you speak with your own accountant or attorney for any tax related questions.

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