Denver Hospitality Portfolio, DST

Denver, CO

ASSET CLASS:  Hospitality Portfolio
OFFERING SIZE:  $28,163,331
LEVERAGE:  43.86%
YEAR BUILT:  1999 (ren. 2018) / 2000 (ren. 2018)
GUEST ROOMS:  68 / 106
SQUARE FOOTAGE:  66,639 / 58,876
HOLD PERIOD:  7-10 Years

The portfolio consists of two extended stay hotels, both located in the Denver area, operating under the TownePlace Suites by Marriott brand. These suites are ideal for travelers who may be relocating or seeking an extended stay, as well as vacationers and business travelers who seek the spaciousness and comfort of a home while on the road.

Both Properties were completely built in 1999 and 2000, with extensive renovations performed in early 2018. Each Property offers a variety of suites that include fully equipped kitchens, in-room work stations, free hot breakfast, free WiFi and shuttle service.

The TownePlace Suites Denver Downtown is an urban hotel in the historic A.B. Hierschfeld printing press building, the largest commercial printing facility in the United States. The Downtown Property was redeveloped in 1999, and includes a four-story building with 122 guest rooms, with extensive renovations performed in 2018. The Downtown Property is centrally located between downtown Denver and Cherry Creek, a premier outdoor retail and dining destination with art galleries and boutique-type shopping options. The Downtown Property offers newly renovated suites with self and covered parking options at no additional cost. The Downtown Property is immediately adjacent to Denver Health Medical, one of Colorado’s leading research, teaching and healthcare institutions. Denver Health Medical serves nearly 93,000 total patients annually and is a major demand generator for the Downtown Property

The West Federal Property features two, three-story buildings offering 106 guest rooms, which were built in 2000 with extensive renovations performed in 2018. The TownePlace Suites Denver West Federal Center is located less than two miles from The Denver Federal Center (DFC) and less than seven miles from Denver's CBD. The DFC is home to about 6,200 employees working at 28 various U.S. Federal government agencies and provides a majority of the demand to the West Federal Property. The West Federal Property is also in close proximity to the rapidly growing St. Anthony’s Hospital, another major creator of lodging demand in the area. The West Federal Property is located approximately a quarter mile from U.S. Highway 6, a major artery servicing the area.

Colorado is currently the eighth fastest growing state in the nation with a population of over five million residents. Its geographic diversity and natural resources have been an economic boon and a draw for tourism. The Colorado Tourism Office reported that 86 million people visited the state and spent $21 billion in 2017.7 Colorado has distinguished itself as a place to live, as well as a place to visit. The population in Colorado is among the healthiest in the nation, likely encouraged by the state’s availability of outdoor activities, physical beauty and mild climate.

Each of the TownePlace Suites hotels is located in the Denver Metropolitan Statistical Area (MSA), which has a combined population of over two million residents, with a projected 1.6 percent annual increase until 2023. This growth is expected to continue in the next 10 years, as projections indicate that Denver households will grow 20,000 per year through 2026.6 Denver is the capital of Colorado and its largest city, which is included in U.S. News & World Report’s Top 10 Best Places to Live in 2018. Denver is known as the Mile High City because at one of its points, it is exactly one mile above sea level.8 The city serves as a key trading point in the central United States due to its housing of large companies, including the U.S. Government, University of Colorado and various Walmart retailers.9 Denver continues to be a corporate demand hub, with companies choosing to relocate to the downtown area. Fortune Magazine named Denver as one of 2018’s top 20 large cities in the United States to start a business.

The unemployment rate for the Denver MSA was at a low of 3.7 percent as of December 2018, lower than the national unemployment rate of 4.0 percent reported in January 2019.11 The area is serviced by Denver International Airport (DEN), the 20th busiest airport in the world and the fifth busiest in the US. DEN serviced 64.5 million travelers in 2018. As one of the busiest airline hubs in the world’s largest aviation market, DEN is the primary economic engine for the state of Colorado, generating more than $26 billion for the region annually.

TownePlace Suites is one of many brands under the Marriott International flag. Marriott International, Inc. (NASDAQ: MAR) offers 30 brands and more than 6,900 properties across 130 countries and territories.3 Marriott International is the world’s largest travel company and its footprint covers more of the world than that of any other travel company, providing unique choices for guests across its many classes of hotel brands.4 Marriott International's combined loyalty program, Marriott Bonvoy, provides over 120 million members with access to more hotels and experiences in more places than anyone else in the hospitality industry.

1st-Year Cash-on-Cash: 6.00%
Projected Cash Range: 5.00% - 6.13%
Projected Cash Average: 5.61%

All-In Price: $50,163,331
Purchase Price: $44,000,000
Appraised Value: $44,800,000
Loan Amount: $22,000,000
Equity Raise: $28,163,331
Reserves: $684,000
Reserves to All-In Price: 1.36%
Net Load: $5,479,331
Net load to Equity: 19.46%
Net load to All-In Price: 10.92%
Appraised Net Load: $4,679,331
Appraised Net Load to Equity: 16.61%
Appraised Net Load to All-In Price: 9.33%

Net Operating Income: $3,151,392
Purchase Cap Rate: 7.16%
All-In Cap Rate: 6.28%
Cap Rate Spread: 88 bps
Breakeven Exit Cap: 9.68%
Breakeven Exit Cap Rate Spread: 252 bps
Appraised Cap: 7.03%
Appraised Cap Rate Spread: 265 bps

Loan Amount: $22,000,000
Term: 10 Years Fixed
Interest Only Period: 5 Years
Amortization Period: 25 Year schedule (after first 5 years)
Interest Rate: 4.691%
Prepayment: 1% of outstanding balance
Lender: Fifth Third Bank
LTV: 43.86%
Non-Recourse: Yes to Investor

DST Due Diligence & Advisory Services

(415) 336-9225

The contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the “PPM”) which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by the issuing company, or any affiliate, or partner there of the issuer. All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM. With respect to the “targeted” goals and performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. These “targeted” factors are based upon reasonable assumptions more fully outlined in the Offering Documents/ PPM. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment. These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. Past performance and statements regarding current occupancy and earnings are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by the issuer, or one of its partner/issuers. The issuer does not warrant the accuracy or completeness of the information contained herein. Some offerings are subject to a “cooling off” period and are not available to all investors. 
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Securities offered through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC, and the issuer are not affiliated.