A REAL ESTATE INVESTMENT AND HOTEL MANAGEMENT COMPANY

Opportunity

• Historic property with deferred maintenance and an outdated guest experience, limiting its ability to compete with modern luxury hotels.
• Prime downtown location and storied legacy presented an opportunity to reposition it as a market leader.
• Leveraging state and federal historic tax credits offered financial advantages to mitigate investor risk.

Strategy

• Executed a $20 million renovation to address deferred maintenance and upgrade guest facilities to improve overall experience.
• Enhanced food and beverage offerings, including the creation of three signature venues.
• Implemented hands-on revenue management and direct sales strategy to leverage new soft-branding and improved physical product.

Results

• Renovation completed on-time and under budget.
• Returned nearly 90% of invested capital to investors over the first 4 years through distributions, inclusive of tax credits.
• Listed on Architectural Digest’s annual “The Most Beautiful Hotel in Every State in America” list.
• Won the 2017 CPE Distinguished Achievement Award for Best Design.
• Shortlisted for Boutique Design’s 2017 Gold Key Award for ‘Best Hotel Mids’.
• More recently, increased total revenue by 23.4% and RevPAR index by 11.0% (2024 vs. 2023).

Opportunity

• Off-market opportunity sourced through our relationship network.
• Acquired the hotel within months of opening, providing the benefits of a brand-new hotel without any construction risk.
• A+ location in the heart of growing downtown Phoenix supported by diverse demand generators that include biotechnology, medical, university, convention, corporate, and sports/events.

Strategy

• Implemented sophisticated and hands-on revenue management strategies to optimize pricing and distribution channels, particularly during the impactful high-demand season.
• Enhanced F&B service and offerings beyond brand standards to take advantage of overbuilt bar/restaurant and meeting space.
• Established a more curated and boutique guest experience to differentiate against the big box Marriott hotels in the market.

Results

• Reached #1 on TripAdvisor out of 177 hotels in the greater Phoenix market.
• Increased total revenue by 24.9% (2024 vs. 2022).
• Improved GOP by 24.1% (2024 vs. 2022).
• Ranked #1 of 6 in RevPAR index growth in 2022 and 2023.
• Ranked as one of the top properties for guest satisfaction in the AC Hotels system.

Opportunity

• Arbor identified an opportunity to acquire the debt of the Yarrow Hotel & Conference Center in Park City, Utah.
• 181-room full-service hotel with a full-service restaurant, bar, meeting space and other amenities.
• The hotel suffered from poor operations and was not fully leveraging its niche position within the high-priced and high-barrier-to-entry Park City market.
• There were limited options in the market that were not in the economy or luxury segments. Further, the hotel had the most meeting space in the market which provided a unique competitive advantage.
• Acquiring the asset through a debt position provided for a very favorable basis.

Strategy

• Take a “loan to own” approach, which focused on foreclosing on the property, reducing cost centers and operations stabilization.
• Upon execution of the foreclosure, move to a “value-add” strategy in which we focused on opportunities to enhance and reposition the property.
• Prior to our ownership, the hotel was losing money as a result of a bloated employee base, poor management, and ineffective sales efforts.
• We immediately restructured operations, renegotiated vendor relationships, and revised sales efforts.

Results

• The hotel’s EBITDA went from a loss of $500k in the year prior to Arbor’s ownership to break even in the first year of ownership, and then to a positive $1 million.
• This was achieved through operational efficiencies, no capital infusion and minimal capital expenditures, and with minimal growth in revenue during the same period.
• Upon exit, the initial investment generated an unleveraged internal rate of return of 33% and a 2.6x equity multiple.

Opportunity

• Quietly-marketed senior loan refinancing opportunity sourced through our network.
• Two of the strongest and most consistent performing hotels in the O’Hare submarket had maturing debt and needed bridge financing.
• Supply and demand dynamics were favorable, with little to no supply in the pipeline and projected increases in airport traffic, convention attendance, and corporate activity in the area.

Strategy

• Leveraged operating background, knowledge of the market, and industry relationships to underwrite hotels analytically and with deep insight.
• Leveraged dislocation in the debt market to negotiate attractive loan terms.
• Utilized a warehouse facility to amplify returns.

Results

• The hotels realized strong year-over-year growth as the market recovered.
• O’Hare submarket and Stephens Convention Center continue to show strong growth.
• Investment is performing and projected to realize compelling risk-adjusted returns (opportunistic IRR in a debt position).