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Red Roof Inn – Detroit Airport West, Belleville, MI – SOLD by WHI

Warmbrodt Hotel Investments, Inc. (“WHI”) is pleased to announce the sale of the Red Roof Inn – Detroit Airport West, Belleville, Michigan. WHI acted as exclusive advisor on behalf of one of its institutional clients.

Red Roof Inn consistently achieves high rankings in J.D. Power & Associates Guest Satisfaction Index Studies in the economy budget segment. The company has been expanding their franchise platform by selling certain assets to qualified franchisees. In conjunction with their $90 Million dollar renovation initiative, Red Roof is strategically implementing the NextGen redesign for all their properties. The property in Belleville will be renovated to new standards and maintain the Red Roof Inn franchise.

“Over the past 12 months we have seen an abundance of interest from hotel investors in the Detroit market on several transactions. It is exciting to see the turnaround, as Detroit is hopefully a leading indicator for the rest of the country,” said Zane Varvel, Vice-President. “The property performance and brand draw continued investor interest for good, consistent cash flow”.


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Kansas City Hotel Market Update

By:  Herb Warmbrodt

Published:  Heartland Business Journal:  June, 2012

Unlike many other major U.S. hotel markets in 2008 and 2009, Kansas City did not experience devastating decreases in occupancy and average daily rate (ADR). Revenue decreases that stung markets such as Detroit, Cincinnati, Chicago, San Diego, Phoenix and Dallas did not occur in the Kansas City market. In some cases, these other markets experienced decreases in revenue per available room (RevPar) of 30-35 percent, while Kansas City experienced a decline of just 15-18 percent. Though still substantial, the Kansas City market was not affected as deeply as these other markets.

Similar to the overall national hotel industry metrics, the Kansas City hotel market experienced increases in ADR, occupancy and RevPar throughout 2011 and the trailing 12-month period ending March, 2012. During this period, occupancy increased 3.4 percent to 57.3 percent, average daily rate increased 2.3 percent to $82.61 and RevPAR increased 5.7 percent to $47.37. According to Smith Travel Research, the overall market consisted of 285 reporting hotels with a total of 31,927 rooms.

The biggest improvement in real estate fundamentals occurred in the Overland Park-Lenexa market and the Country Club Plaza area. Both areas post overall RevPAR growth of an impressive 10 percent, while the Kansas City North Airport market experienced growth of only 3.8 percent. The downtown hotel market is projected to have relatively flat occupancies through 2012 and then increase due to booked convention business in 2013 and 2014. ADR in the downtown hotel market is expected to increase by 2.5 percent in 2012.

Demand Generators

Kansas City has a diverse mix of demand generators. Leisure demand is driven by the Major League Baseball team, Kansas City Royals, and NFL team, the Kansas City Chiefs. This year Kansas City will host the 2012 All-Star Baseball game. The Sprint Center, located downtown, has become a major venue for concerts and college sporting events, including the Big 12 basketball tournament. The Country Club Plaza, an upscale, outdoor shopping and entertainment district, continues to draw visitors regionally, allowing the hotels in the area to experience the highest Occupancy and ADR levels in the city.

Greater Kansas City is headquarters to several Fortune 500 companies; Sprint Nextel Corporation, H&R Block, YRC Worldwide Inc., and International Assets Holding Corporation. Additionally, Fortune 1000 corporations include Great Plains Energy, Aquila, AMC Theatres, Applebee’s, DST Systems, Garmin International, Cerner, Seaboard Corporation, and Russell Stover Candies. Hallmark Cards’, which is privately held, is also located in Kansas City.

Kansas City is one of ten regional office cities for the United States Government. The U.S. Government is the largest employer in the Kansas City metro area, with more than 146 federal agencies maintaining a presence. The Internal Revenue Service maintains a large service center in Kansas City that is nearly 1,400,000 square feet and employs approximately 2,700 employees. The new Federal Reserve Bank, which employs approximately 925 opened in 2010. The General Services Administration has more than 800 employees in Kansas City, with most located at the Bannister Federal Complex in South Kansas City. The Bannister Complex is also home to the Kansas City Plant, which is a National Nuclear Security Administration facility operated by Honeywell. Honeywell employs nearly 2,700 at the Kansas City Plant, which produces and assembles 85 percent of the non-nuclear components of the United States nuclear bomb arsenal. The Social Security Administration has more than 1,700 employees in the Kansas City area, with more than 1,200 located at its Mid-America Program Service Center (MAMPSC) in downtown Kansas City.

Development

Presently, there are seven properties under construction in the Kansas City market. These include three new Holiday Inn Express brands in the Airport market, the Midtown market which is adjacent to the KU Medical Complex and the Overland Park market. A new 55-room luxury boutique property is taking form downtown in a renovated office building; the Briarcliff mixed-use development, just north of downtown, has a new Marriott Courtyard under construction; Lenexa has a new Hilton Garden Inn under construction at 119th Street and Interstate 35; the Drury Hotel opened a new property in 2011 in the eastern suburb of Independence. The Country Club Plaza has the West Plaza boutique hotel which is part of the stalled West Plaza mixed-use development. Construction on this project was halted in 2008 due to initial cost over runs. The entire project was sold and is now under construction with an expected opening in late 2013.

Property sales in the market have primarily included sales in the select-service and limited-service segments with transaction activity increasing throughout 2011 and the first quarter of 2012. The majority of the sales have taken place in the North Airport Market, and the Overland Park-Lenexa and Olathe Market.

Investors are local, regional and national investors, which are multi-property owners interested in expanding their portfolios in the early stages of the current economic recovery. There are reports of higher-end, institutional-grade properties receiving attention from national hotel investment groups. These projects have high barriers to entry and are proximate to major demand generators within the market. Transaction activity is projected to stay active through 2012 and 2013, particularly with the corresponding growth in ADR, occupancy and RevPar.

Increased property sales have also been a function of the availability of debt financing provided by local, regional and national financial institutions. Though very cautious in their underwriting criteria, a number of financial institutions began lending in the Kansas City market in 2011. Additionally, we are seeing owners of larger properties in the market refinancing with CMBS debt provided by national firms.

Overall, the Kansas City hotel market is likely to see continued improvement in real estate fundamentals and additional investment by local, regional and national investment groups.

Herb Warmbrodt is president of Warmbrodt Hotel Investments based in Leawood, Kansas.


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WHI Selected to Advise in the Sale of RRI – Westport – St. Louis, MO

Warmbrodt Hotel Investments, Inc. (“WHI”) has been retained as the Exclusive Agent to advise in the sale of the Red Roof Inn – Westport – St Louis, Missouri.

The Property is located at 11837 Lackland Road, St. Louis, MO 63146. The location has excellent visibility on Highway 364 and access from Interstate 270. The location is considered good within the St. Louis market and is proximate to the Westport Plaza and the St. Louis International Airport. Westport Plaza is across Page Avenue to the North of Red Roof Inn St. Louis Westport. The 42 acre development, resort and entertainment center is a local attraction for business, leisure and festivals and is located in the St. Louis suburb of Maryland Heights.

The 158-room, three-story, exterior-corridor property was built in 1986. It consists of two buildings. The Property is a typical “Chalet” prototype Red Roof Inn. Significant capital improvements and FF&E replacement were made to the property in 2006 which included updates to the lobby and guestrooms. Details included granite countertops in the lobby and guestrooms, new interior and exterior paint, new stairwell and balcony, new interior and exterior lighting and a new softgoods and casegoods room package which included carpet, mirrors, and drapes. A new roof was completed in 2005.

The Red Roof Inn represents an excellent acquisition opportunity for a local or regional owner looking to acquire a well located and strong performing asset in a growing market at a price well below replacement cost.

INVESTMENT HIGHLIGHTS

  • RevPar has increased 17% through 2011
  • Occupancy increased nearly 15% from 2010 through 2011
  • Delivered free and clear of management
  • Location is easily accessible from I-270 and Highway 364 (Page Avenue)
  • Attractive price offering at 2.3x gross room multiple
  • Price affords new operator to purchase significantly below replacement costs

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Warmbrodt Hotel Investments Announces Opening of Chicago Office

CHICAGO-Lodging investment brokerage veteran Herb Warmbrodt has announced the opening of a Chicago office at the Midwest Lodging Investors Summit.  The new office for Warmbrodt Hotel Investments, Inc. (“WHI”) is located in the Loop at 22 West Washington. The decision to expand coincides with the market rebound and continuing demand for more proximity to client’s properties.

Heading up the Chicago office is Zane Varvel, Vice-President of the firm. Working directly with Herb in Kansas City the past 5 years, Mr. Varvel has been involved in hotel sales transactions in 10 states and helped expand the company’s clients and research capabilities. Prior to WHI, he was a commercial real estate broker in Omaha for Grubb and Ellis Pacific Realty. Working with hotel developers to enter the Omaha market, Varvel became enthralled with the unique aspects of lodging real estate. He joined Warmbrodt after an introduction from a mutual client.

“I was fortunate to join Herb just before the market turned and became more challenging. His integrity, character, and work ethic throughout the cycle remain exceptional. The exiting opportunity to help expand a company with those ideals is a testament to Herb and the clients who we continue to be successful with” Varvel says.

“I am excited with the expansion of the WHI platform to serve our growing client base and we are planning future office additions in select locations in the near future,” said Herb Warmbrodt. “Our on-going mission concentrates on our client’s goals and needs. The Chicago office allows us to be more effective on this focus in the upper and eastern Midwest.”


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Super 8, El Dorado, Kansas- SOLD by Warmbrodt Hotels

Warmbrodt Hotel Investments, Inc. (“WHI”) is pleased to announce the sale of the Super 8 Hotel in El Dorado, Kansas. WHI acted as exclusive advisor throughout the transaction on behalf of one of its corporate clients in their ongoing disposition strategy.

The 49 room, two story interior corridor hotel is located on Central Avenue in El Dorado, Kansas on Highway 254 is just east of Interstate 35. Northeast of Wichita, El Dorado is considered part of the Wichita Metropolitan Area. The community has a solid foundation of education, industry and recreation. Butler Community College has over 12,000 students enrolled and features championship caliber sports teams in their leagues. The Frontier El Dorado Refining Co., is one of the largest refineries in the plains and rocky mountain regions with a capacity of 110,000 barrels a day.

A local partnership purchased the property and intend to make the necessary improvements to maintain the Super 8 franchise. A marketing price of $1,850,000, demand for the property was high and the sales price revenue multiple above the national average. “Historical occupancy was very strong, with proximity to the refinery and interstate as the main demand generators. It is encouraging to continue to see active buyers and sellers in an improving lodging market” said Zane Varvel Vice-President who helped facilitate the transaction.


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WHI Advises in the Sale of 5 Red Roof Inn Hotels

Warmbrodt Hotel Investment, Inc (“WHI”) announced today (5) five separate property sales. WHI acted as the exclusive adviser. “We are once again very pleased to represent this important institutional seller on these transactions” stated Herb Warmbrodt, President and founder of WHI. “These transactions represent a total of (9) nine Red Roof Inns where we have represented this client. We currently have (4) four more under purchase agreements and additional properties on the market. The investment community in this segment is very receptive to the new Red Roof Inn NexGen standards and customer base. We found financing has been readily available for these projects with buyers who have a solid track record.”

The properties sold were Red Roof Inns located in the Chicago suburbs of Hoffman Estates and Northbrook and the Detroit suburbs of Troy and Madison Heights. The Chicago properties sold in separate transactions while the Detroit properties were sold to a single purchaser. Sales prices were not disclosed and all of the properties will be renovated to new standards and maintain the Red Roof Inn franchise.

Red Roof Inn, Chicago-Hoffman Estates is a 119-room, three-story, exterior-corridor property located in Hoffman Estates, Illinois, a northwest suburb of Chicago. The Property is proximate to major demand generators including Woodfield Shopping Mall, Sears Center, Riverboat Gambling in Elgin and Six Flags. Companies proximate to the Property include, AT&T, Sears, United Airlines, ADP Corporate Training Center, Sieman, Mori Seika and Clair’s Distribution.

Red Roof Inn, Chicago-Northbrook is a 117-room, three-story, exterior-corridor property located in Deerfield, Illinois, a north shore suburb of Chicago. The Property is 33 miles from Chicago Midway Airport, 17 miles from O’Hare International Airport and 21 miles from downtown Chicago. The Property is proximate to the Chicago Botanical Gardens and the Ravinia Festival. Companies proximate to the Property include, Crate and Barrel, Underwriter’s Laboratory, Inc., Allstate Insurance,Baxter Healthcare and Caremark.

Red Roof Inn, Detroit-Troy is a 109-room, two-story, exterior-corridor property, consisting of two buildings. It is located in Troy, Michigan, a northern suburb of Detroit. The Property is 17 miles from Detroit City Airport and 15 miles from downtown, location for The Palace-Pistons Arena; Ford Field, home of the Detroit Lions NFL football team; Comercia Park, home of the Detroit Tigers, American League Baseball team and Joe Lewis Arena, home of the Detroit Red Wings of the National Hockey League.

Red Roof Inn, Detroit-Madison Heights is a 108-room, two-story, exterior-corridor property, consisting of two buildings located in Madison Heights, Michigan, also a northern suburb of Detroit. This Property is only approximately 3 miles from RRI-Troy, therefore sharing the same demand generators.

Red Roof Inn, Detroit Farmington Hills is a 108-room, two-story, exterior-corridor property, consisting of two buildings is located in Farmington Hills, Michigan, a northwest suburb of Detroit. It is approximately 23 miles from Detroit City Airport and 25 miles from downtown Detroit. This property is approximately 25 miles from RRI-Troy,therefore also sharing the same demand generators.


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WHI Advises in the Sale of Ramada-Stevens Point, Wisconsin

Warmbrodt Hotel Investments, Inc. (“WHI”) is pleased to announce the sale of the Ramada Stevens Point located in Stevens Point, Wisconsin. WHI acted as exclusive advisor throughout the transaction on behalf of County Springs Stevens Point, LLC. The buyer and purchase price were undisclosed.

The Ramada-Stevens Point is 294-room, one, two, three and six-story story, interior-corridor, full service hotel located on over 14 acres, in the highly developed commercial area near Interstate Highway 39 in Stevens Point, Wisconsin. The Property includes a convention and expo center as well as a restaurant and lounge with street access, a 20,000 square foot domed recreational area which includes an indoor swimming pool and lounge area,15 meeting rooms containing over 30,000 square feet and fitness center.


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Red Roof Inn – Blue Ash, Ohio

Warmbrodt Hotel Investments, Inc. (“WHI”) has been retained as the Exclusive Agent to advise in the sale of the Red Roof Inn – Blue Ash, Ohio

The Property is located at 5900 Pfeiffer Road in Blue Ash, Ohio 45242, on the west side of Interstate 71 and Pfeiffer Road. The location is considered good within the Blue Ash market and is 28 miles from Cincinnati Northern Kentucky International Airport, 12 miles from Cincinnati Municipal Airport and 14 miles from downtown Cincinnati. Within close proximity are numerous restaurant choices and area attractions such as Kings Island Amusement Park, The Beach Water Park, and Entertainment Junction. The Ford Motor Company Transmission Plant is only .7 mile from the Property.

The 108-room, three-story, exterior-corridor property consists of two buildings which were built in 1984 and totally renovated in 2005-2006. In addition to the guest rooms, one building contains a guest lobby and office area, storage rooms, an electrical room, a boiler room, laundry and a vending room adjacent to the lobby. The lobby area is typical of the Chalet design containing a vestibule entrance, lobby/registration desk area and manager’s office and employee restroom behind the registration desk. The vending area is adjacent to the lobby with its own outside entrance.

INVESTMENT HIGHLIGHTS

  • Revenues increased 19.6% in 2011
  • Impressive market penetration of 129.2% ending March, 2012 , a 7% increase over the same period in 2011
  • Corporately owned and managed
  • Delivered free and clear of management
  • Desirable location within the Cincinnati market
  • Attractive price offering at 2.25x gross room multiple
  • SBA Financeable
  • Price affords new operator to purchase significantly below replacement costs

The Red Roof Inn represents an excellent acquisition opportunity for a local or regional owner to acquire a well located and renovated asset with a growing revenue stream, in a growing market, and at a price well below replacement cost.


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WHI Market Focus: Resilient Omaha

The hotel real estate industry is going through the most difficult time in generations.  The recent pickup in performance measures gives everyone in the industry hope the worst is behind us.  As an active adviser in the hospitality investment market, Warmbrodt Hotel Investments is involved in numerous opportunities and challenges across the country.  WHI would like to share the compiled knowledge and research with its clients, colleagues and friends.

We are pleased to introduce our first Market Focus newsletter from Warmbrodt Hotel Investments.  Our newsletters will either highlight a particular market, or discuss pressing issues involving our industry.  We welcome your discussion and feedback.  Please add your comments below or feel free to call and discuss opportunities!
Resilient Omaha : The Heart of America

Warmbrodt Hotel Investments has been extremely active in the Omaha, Nebraska metropolitan area for the last several years.  The resiliency and promise the market continues to show is a perfect example of the success of business friendly community.

The lodging market in Omaha can be characterized as a relatively stable market.  In November of 2006, the Omaha World Herald reported an additional 2,000 rooms under construction or in the planning stages around the metropolitan area.  Almost all were completed, with the additional supply replaced by projects not mentioned in the report.  The majority of construction occurred in downtown and Council Bluffs as well as West Omaha and the southwest Sarpy County suburb.

Hampton Inn, Homewood Suites, Fairfield and Holiday Inn all opened around the beginning of 2008 in downtown.  Council Bluffs completed a Springhill Suites, Value Place, Microtel, Sleep Inn, (recently converted to Holiday Inn Express), and Hilton Garden Inn.  John Q. Hammons planned nearly 600 rooms in La Vista with the recent construction of Embassy Suites and Courtyard, however the Residence Inn project was kept on the shelf.

A separate developer built a Hampton Inn off the same exit on 126th Street and I-80.  Hilton Garden Inn at Village Pointe mall in West Omaha and Hampton Inn near Alegent Health Lakeside Hospital are also examples of suburban growth westward.  North of town along I-680, Holiday Inn Express opened in 2008, while in the southern suburb of Bellevue, Hampton Inn and Candlewood were completed.  Redevelopment in town consisted of the Courtyard Marriott in Aksarben Village and Towne Place Suites in Old Mill business park.

Projects under construction in 2010 include the Staybridge Suites near Children’s hospital off 80th and Dodge, Value Place in Bellevue, and Holiday Inn Express next to WalMart on I-80 and Highway 370.  In November of 2010, Starwood Hotels will return to Omaha with The Element at Midtown Crossing, Mutual of Omaha’s campus redevelopment just west of downtown.   The Hilton attached to the Qwest Center recently announced a 150 room expansion.

In light of 20% addition in supply, it is truly remarkable the market continues to beat national averages.However, upon a closer look, recent economic developments have added significant demand generators, justifying the new supply.

Omaha began the turn of the century with grand ambitions for transforming its downtown.  An admirable balance between public and private investment helped the city transform an environmentally challenged industrial site into a beautiful riverfront.  The coordination led to Gallup headquarters, National Park Service headquarters, Qwest Convention Center, residential condominiums and a pedestrian bridge crossing the Missouri River into Council Bluffs.  Simultaneously, headquarters were being built for Union Pacific and First National Bank within different blocks inside downtown.

Food conglomerate Con Agra rejuvenated their campus, while real estate developers and Creighton University added residences from the Old Market to north downtown.  Over $2Billion was invested in giving Omaha’s downtown a truly live, work, and play atmosphere.  Today, TD Ameritrade Park is under construction across 10th Street from the Qwest Center.  It will be home to the College World Series for the 2011 season and beyond.

Omaha’s economy has always seen steady growth. Traditionally, the industries giving the local market a solid foundation included telemarketing, insurance, transportation, agriculture, and food manufacturing.  Today, the low cost of living and highly educated workforce are attracting some of the world’s biggest IT companies.  Google and Yahoo each invested hundreds of millions of dollars in data centers the past 3 years.  Combined with the existing presence of PayPal and TD Ameritrade, Omaha is becoming a known destination for IT services.  The United States Strategic Command, located at Offutt Air Force Base in Bellevue, has brought numerous defense contractors working in information operations and military deterrence.  Also, the healthcare industry continues to expand in Omaha, as it is a regional destination for many in the Great Plains, with Alegent Healthcare being the largest private employer in Omaha.

Hotel owners in Omaha certainly aren’t immune to the downturn, but the numbers continue to show it is a hidden gem…..

Whole Omaha Market

Period ADR Occupancy RevPar RevPar Change
YTD $87.49 56.6% $49.55 3.2%
3-Month $91.71 63.9% $58.57 5.0%
12-Month $83.81 54.9% $46.00 -7.8%

*Source-June 2010 STR report, 10,887 room sample

 Smith Travel Research reported year to date performance for the U.S. hotel industry has had RevPar increase 2.3%.  Omaha has outperformed the national average by 39% in obtaining an increase of 3.2%

Suburban Omaha Market

Period ADR Occupancy RevPar RevPar Change
YTD $80.59 49.2% $39.62 2.9%
3-Month $84.73 56.9% $48.22 5.2%
12-Month $77.13 47.2% $36.39 -8.2%

*Source-June 2010 STR report, 6,032 room sample

 

Omaha CBD/Council Bluffs Market

Period ADR Occupancy RevPar RevPar Change
YTD $93.68 65.6% $61.46 3.4%
3-Month $98.29 72.2% $70.99 4.5%
12-Month $89.71 64.2% $57.55 -7.5%

*Source-June 2010 STR report, 6,032 room sample

 

The substantial redevelopment in downtown Omaha has helped hotel owners immensely.  Following the national trend, Omaha is an example of central business districts continuing to outperform the suburbs.

HVS President and founder Steve Rushmore presented at the 2010 NYU conference this summer in New York City.  The most recognized hotel consulting and services organization had some jaw dropping statistics that included Omaha.

Average Annual Compounded Growth in Property Value: 1987-2015

Rank

1.  Miami                                   10.2%

2.  New York                             9.3%

3.  Austin                                    9.2%

4.  Omaha                         9.1%

5.  Houston                                7.0%

6.  Las Vegas                              6.8%

7.  Denver                                   6.6%

8.  Fort Lauderdale                 6.2%

9.  Oahu                                       6.0%

10. New Orleans                       5.8%

United States  overall           4.7%

CPI: 1987-2015                       3.0%

 

Markets That Exceeded the Dow: 1987-2006 % Change

1987-2006

Dow Jones                               543%

Miami                                       918%

Austin                                       744%

Omaha                           740%

New York City                       658%

Las Vegas                                554%


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