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The purpose of this Confidential Investment Offering Overview is to provide a summary of a possible future private investment opportunity that may be made available to a certain limited number of accredited investors. This is not an offer to sell real estate and/or any type of security, partnership interest, public or otherwise.
The contemplated offering, if made available formally, would provide investors with the opportunity to acquire a partial interest in a 90,459 square foot hotel, located in Lincolnshire (Suburban Chicago), Illinois. The hotel is operated by SpringHill Suites, a division of Marriott International, Inc., a leading worldwide hospitality company with over 3,600 lodging properties and operating units in the United States and 71 other countries and territories. Lincolnshire Hotel, LLC, an SMB Equity, LLC sponsored entity, will co-own the property with an operating partner, Robert Finvarb Companies, that specialize in developing Marriott branded hotels across the country.
The hotel, which was built in 2001, had been performing well until the economy faltered in 2008; and as a result, the operating performance was unable to support the $17 million mortgage on the property. Recently, the hotel was taken over in bankruptcy by the Lender, and Lincolnshire Hotel, LLC has been presented with an opportunity of purchasing the property from the Lender with a significant discount of approximately $4 million including all costs. In comparison, to build and develop this hotel in today’s market, the costs would be in excess of $24 million, over $10 million more than the current purchase price. In addition to the discounted mortgage and costs, the property has been well maintained and underwent a significant $1.7 million renovation in 2009 that focused on upgrades to the guestrooms, corridors and public spaces.
The property is being acquired for approximately $13,120,000 with an $8.12 million mortgage. The loan will be at a rate of 6.40%, with a 25 year amortization and a ten year term. Lincolnshire Hotel, LLC intends to invest 20% of the total equity in this project.
SpringHill Suites is part of the Marriott International family of hotels. In 1998, Marriott International announced plans to convert Fairfield Suites to SpringHill Suites by Marriott. By doing so, Marriott hoped to capture a share in the upper moderate-priced all-suite lodging segment of the hotel industry. As of December 31, 2010 there were 274 total SpringHill Suites in North America. All properties feature a Suite Seasons hot breakfast buffet, most have a pool and exercise room, and all feature complimentary high-speed internet access. In contrast to its sibling brands, Residence Inn and TownePlace Suites, which are extended-stay properties, SpringHill Suites competes with mainstream, all-suite hotel brands, such as Comfort Suites, Quality Suites, and Ramada Limited Suites.
Our Operating Partner, Robert Finvarb, is the founder of the Robert Finvarb Companies, that specialize in developing Marriott branded hotels in high-growth markets that are historically underserved. Based in Florida, Finvarb has developed a diverse array of real estate projects including hotels, apartments, office and retail space. Robert Finvarb Companies focuses on developing their projects through the entire process; from the day the hotel opens for business, Finvarb’s company oversees sales, marketing, accounting and administration functions that are typically undertaken by Marriott’s management staff at each hotel. Currently, Finvarb owns 8 hotels that are open and operating under Marriott flags and 2 hotels that are in development. Within the Marriott family of hotels, Finvarb has chosen to focus on the Courtyard by Marriott, Residence Inn by Marriott and SpringHill Suites brands, as these products have long-standing track records of success.
Marriott International, Inc. (NYSE: MAR), an internationally known chain of hotels employs over 129,000 people; and, based in Bethesda, Maryland is the world’s leading hospitality company. Marriott had 2010 revenues of over $11 billion, and a net income of $458 million with 2010 shareholder’s equity of $1.58 billion. More information regarding Marriott can be found by visiting www.marriott.com.
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