lenny nai latter & blum 2015 hospitality advisory services

8/9/2019 Lenny NAI Latter & Blum 2015 Hospitality Advisory Services

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Hospitality & Commercial Real Estate Service,Worldwide.

HOSPITALITY ADVISORY SERVICES INSTITUTIONAL RANGE REGIONAL EXPERTISE NATIONAL GEOGRAPHIC SCOPE


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Id like to begin simply: by thanking you.

As one of our extremely valued clients, were sincerely grateful for the trust and confidence youve shown in us throughout

2014, as of course, we have been for that same trust in prior years.

We happen to think that your trust is well placed. As we welcome 2015, the national lodging market is reassuringly robust,

with an expectation of continued and sustained growth over the next 2-3 years.

Close to home, New Orleans has been transformed into an Institutional Lodging Market, in large part because of rising

RevPAR growth in 2010-2014, limited new supply between 2005-2014, and an economic surge in the region. This has

created a higher barrier to market entry and today, over 77% of the hotels in the Central Business District are owned by

public or private Institutional Lodging entities.

The nature of the citys market has been a substantial factor in our successes, especially in the twelve months trailing since

the building and buying of hotels in New Orleans reached equilibrium in 2014.

Lets look at those successes, and the rest of the NOLA market. Our Hospitality Division closed 5 new hotel developments

in the CBD over 850 rooms totaling approximately $200,000,000 in completed transaction costs.

The 182-room Oil and Gas Building, the 110-room Moxy by Marriott, the 185-room 1111 Gravier, the 165-room Cambria

Suites by Choice, and the 210-room Luxury Boutique Independent NOPSI Building. We also closed the largest single

existing hotel transaction citywide in 2014: the 223-room Sheraton Four Points in the 4th quarter.

Last year, Marriott chose New Orleans to launch the opening of the first AC by Marriott hotel in the US which is currentlyfor sale (Newcrest Image) and in 2016, NOLA will also host one of the first Moxy by Marriott hotels in the country.

Other developments include the 200-room Aloft (HRI) opening in 2015, the 216-room ACE hotel, set to open 2016 and

the first Hyatt House in New Orleans (180 rooms), which is being developed within an existing Class B office building on

Poydras street. Northview/Apollo superbly executed and completed the transformation of the Queen and Crescent hotel

into an upscale lifestyle boutique property (196 rooms). This asset is a must see on your next trip into town.

In 2014, sales of existing hotels were robust, though the velocity and volume of existing lodging product did not exceed

2013s peak. A few significant trades and new players to the market include Garrison/Wright Staybridge (182 rooms),

OKeefe Plaza (100 rooms - conversion to HIE), and Rockwood/Warner with the acquisition of the Country Inn and Suites

(155 rooms for $190,000 per room). The first hotel I developed - The Whitney Wyndham (92 rooms) - also traded toAlexander Land last year, and is being upgraded to a beautiful, independent boutique property.

New brands and owners to the market Include Chesapeake, Connor Acquisitions, Building Land and Technology (BLT),

Garrison, Wright Development, Joie de Vivre (JDV), Canopy, Moxy, Baywood, Fillmore Capital, Destination/Lowe,

Salamander, Summit, and Newcrest Image.

The most exciting development, though, is that the New Orleans lodging community is preparing to embrace a substantial

addition to its Luxury Competitive Set with the redevelopment of the World Trade Center (WTC).

LETTER TO OUR CLIENTS:

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Hospitality & Commercial Real Estate Service, Worldwide.


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Brands and buyers in the mix include NAI/Latter& Blum Chairman Bob Merrick, teamed with Woodward Interest, Carpenter

and Co., teamed with Four Seasons, HRI with Andaz, by Hyatt, Darryl Berger, Roger Ogden and Joe Jaeger with Conradby Hilton, Oxford Capital LLC, and Woodbine teamed with Valencia.

These are all mixed-use developments with dual components including a 200-350 room hotel, and for rent/for sale

residential, fee simple residences. This is all in what is arguably the best location for mixed-use development in the city.

The Le Pavilion hotel transaction has been placed on hold; we understand it is coming back to market in the 1st quarter of

2015. Currently, the management encumbered Hampton Inn Portfolio is still available for sale and the D-Day Museum is

building a 200-room hotel on site for the 500,000 people that visit the museum annually.

The dual-branded, 365-room Marriott Residence Inn/Springhill Suites project on Canal street is in final negotiations with

the city, and is expected to emerge with an acceptable compromise regarding historic buildings, height, and density. Thisproject could very well drive further localized development.

Chesapeake recently completed their conversion of the 423-room W New Orleans to Le Meridian; and the Pontchatrain

hotel traded and will become an upper-up-scale lifestyle hotel. The Doubletree is under contract and is expected to trade in

the 1st Quarter of 2015.

Yet more welcome news is that the $3.5 Billion BIO DISTRICT is slated to open Phase I in 2015, which will increase weekday

corporate demand. Additionally, construction is now underway with the new airport terminal (to open 2018/2019), which

will most assuredly improve Lift and customer service in and out of the city.

These two developments, opening back to back, coupled with HVS opening a new office in the CBD will further galvanizeInstitutional ownership in New Orleans. The city retains its enviable position as a Gateway City, with one of the countys

largest ports, a very strong convention calendar 2015-2018, and strong upward growth in the Leisure segment annually

(RevPAR $130- 2014 CBD).

Eyeing the future, between 2015-2019, the New Orleans lodging market should experience a healthy 1% annual increase

in supply (including the 1000-room Convention Center Hotel 2019), and RevPAR (demand) growth of approximately 4.8%

annually, mostly through rate escalation.

With the arrival of for sale residential real estate trading from $550-$800 psf in the CBD in 2014, we believe many

existing potential hotel conversion opportunities will include a combination hotel and residential component; leveraging

economies of scale with dual branding and use, sharing amenities and management.

The Hospitality Division of NAI/Latter&Blum looks forward with relish to forging new inroads in other top 25 lodging

markets both regionally and nationally in 2015. Our continued focus on our clients best interests will surely spearhead our

ongoing successes.

As we go forward together, Id like to again thank you for your business, continued trust and friendship.

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The 223-room Sheraton Four Points represents the largest (in terms of rooms) single New Orleans hotel transaction of

2014. The seller is an Austin-based, privately-held real estate firm. The buyer is an Atlanta-based lodging owner, with their

first New Orleans property. The sale occurred during a brand conversion that will give this asset a competitive basis all in.

It has a great location, just minutes from the new international airport terminal, coupled with superb access and visibility.

The high barrier to entry location - due to few nearby developable sites - ensures this asset will remain at the forefront of

its competitive set.

INSTITUTIONAL PROPERTY SALES


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Located in the heart of the Arts/Central Business District, 744 St Charles Avenue is one of the first Moxy by Marriott hotels

to be built in the country, with a scheduled opening in 2016. This lifestyle/boutique millennial-focused brand represents

a substantial shift in Marriotts future growth: third party management and increased yield led by a smaller but spacious

room concept, in high entry barrier urban markets. With the Marriott reservation system leading the charge, the chic

but cheap Moxy New Orleans is being developed by a multi-generational New Orleans family, is fully entitled, and is

expected to start construction in the 1st quarter of 2015.

LODGING DEVELOPMENT ADVISORY SERVICES


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1111 Gravier is a 105,000 square foot concrete structure formerly known as the Rault Center. The building has been

vacant since the 1972 fire which precipitated the changing of the fire codes and life safety standards of high rise buildings

nationwide. The buyer was thus able to obtain a Historic Designation for the building, which substantially lowers its

acquisition basis and allows for the development of the first Joie de Vivre (JDV) hotel by Commune in the city to forge ahead.

Fully entitled, this project is situated adjacent to the French Quarter and Bio District, and is scheduled to open in 2016.

ADAPTIVE RE-USE AND VALUE ADDED REDEVELOPMENT


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The Oil and Gas Building at 1100 Tulane Avenue is a 110,000 square foot historic structure situated one block from the

French Quarter and adjacent to the $3.5billion Bio District (slated to open mid 2015). It is just over a five minute walk to

the Convention Center and Superdome. The buyer is a Washington-based institutional private lodging developer, owner

and management company and the seller is a local nonprofit organization. Slated to open in 2016, 1100 Tulane, which

is currently vacant, will be converted into Baywoods first hotel in New Orleans. Fully entitled, the property sits at the

forefront of the entrance to the citys ever-growing for-rent residential market.


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The 200,000 square foot New Orleans Public Service Building (affectionately known as the NOPSI building), has arguably

the most dramatic and sensational lobby of any historic building in New Orleans. With 35 foot ceilings in the lobby,

this Art Deco diamond is set to become one of the citys largest Luxury Independent hotels, with 210 rooms. The buyer is

an institutional private developer and first time New Orleans lodging owner. The seller is a successful New Orleans real

estate group, who purchased the building prior to 2005, and until approached, was planning to develop the property

into apartments. The site, which includes three buildings and a parking lot, is located three blocks from the French Quarter

and three blocks from the Bio District. It is nestled squarely in the CBD adjacent the new Aloft, the new AC by Marriott, the

Waldorf/ Roosevelt, the Marriott Renaissance FQ, the Ritz Carlton, Le Pavilion and Homewood Suites.

OFF MARKET ACQUISITIONS


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In 2015, the fate of the citys most desirable piece of property will be decided: the sale/lease of the World Trade Center

(WTC) at 2 Canal Street. The WTC is unquestionably in the best location in New Orleans for a mixed-use project. Eleven

bids were initially received and the city has narrowed the list down to five, who will submit their detailed proposals in the first

Quarter of 2015. Brands and buyers in the second round include NAI Latter& Blum Chairman Bob Merrick with Woodward

Interests, Carpenter and Company and Four Seasons, HRI with Andaz by Hyatt, Darryl Berger, Joe Jaeger, and Roger Ogden

with Conrad by Hilton, Oxford Capital LLC, and Woodbine Development teamed with Valencia. The WTC will be a major

addition to the New Orleans Luxury Competitive Set, which will combine a 200- 350 room hotel with separate residential for-

rent and for-sale components. It is enviably at the apex of the Mississippi River, Convention Center, French Quarter, and CBD.

TROPHY ASSETS


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WTC LUXURY MI XED USE

MONTELEONE

DOUBLE TREE

PROPOSED RI/SHS

THE RITZ CARLTON

MARRIOTT REN

MARRIOTT AC HOTEL

HAMPTON INN & SU

HAMPTON INN & SUITES

CROWNE PLAZA

HYATT

CAMBRIA SUITES BY CHOICE

COUNTRY INN & SUITES

ROOSEVELT WALDORF ASTORIA

THE NOLA LODGING MARKET 2015 - 2019


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ALOFT

ACE HOTE L

MOXY BY MARRIOTT CBD

MOXY BY MARRIOTT

1100 TULANE

HYATT HOUSENOPSI

CONVENTIONAL CENTER MIXED USE DEVELOPMENT

1111 GRAVIER

HOLIDAY INN EXPRESS


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CONVENTION CENTER MIXED USE DEVELOPMENT

CONVENTION CENTER

CBD

ANCHOR DEVELOPMENTS 2016 - 2019

PLAZA TOWERS MIXED USE DEVELOPMENT


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BIO DISTRICT OPENING 2015-16-17

WORL D TRADE CENT ER ( WTC) MIXED USEPOTENTIAL BRANDS INCLUDE:

FOUR SEASONS, CONRAD, ANDAZ, VALENCIA

FRENCH QUARTER

CONVENTION CENTER STATISTICS

Year Number of Conventions Number of Delegates

2006 43 428,000

2014 128 750,000

Source: Ernest N. Morial Convention Center

VISITATION STATISTICS

Year Number of Visitors Visitor Spending2006 3,700,000 $2,800,000

2014 9,300,000 $7,000,000

(2004 Peak) 10,000,000 $5,000,000

2018 (Proj) 13,000,000 TBD


AIRPORT STATISTICS - LOUIS ARMSTRONG NEW ORLEANS

Year Passenger Traffic

2006 6,200,000

2014 7,200,000

(2004 Peak) 9,700,000



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CORE NEW ORLEANS LODGING MARKET


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MAHALIA JACKSON THEATRE

FOR THE PERFORMING ARTS

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FRENCHQUARTER

FAUBOURGMARIGNY

WESTBANK

FRENCHQUARTER

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WESTBANK

HOTEL ROOMS

PURCHASEPRICE/ROOM

EST.ALL- IN

PRICE/ROOM

SOLD 2014

1 Country Inn and Suites (add 70 rooms) 155 $190,000 $235,000

2 Pontchartrain Hotel (lifestyle Indep conversion) 100 $190,000 $165,000

3 Staybridge Suites (land lease) 182 $123,000 $150,000

4 Okeefe Plaza (HIE conversion) 100 $85,000 $140,000

5 Quality Inn (Moxy conversion) 110 $85,000 $165,000

6 Whitney (Independent conversion) 92 $115,000 $165,000

Sheraton Four Points (WYN conversion)* 223 $54,000 $67,000

Total 962

NEW SUPPLY 2014 - 2019

7 ACE Hotel 216 N/A $235,000

8 Hyatt House 165 $21,212 $160,000

9 1111 Gravier 185 $29,730 $200,000

10 Oil and Gas Building 185 $37,838 $165,000

11 ALOFT (Mixed Use Development) 200 $180,000

12 NOPSI Building - Luxury 210 $55,238 $225,000

13 Moxy by Marriott 110 $18,182 $165,000

14 Cambria by Choice 165 $26,061 $165,000

15 WTC (Mixed Use) 250 TBD$400,000-$600,000

Total 1686

2015 ON MARKET / UNDER K

16 Le Pavillion (land not included) 216 $275,000 $335,000

17 Hampton Inn Portfolio (mgt. encumbered) 575 $145,000 $165,000

18 Doubletree CBD 367 $240,000 $300,000

*Metairie


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430 NOTRE DAME STREET NEW ORLEANS, LA 70130 504.569.9483

LEONARD VANCE WORMSER (LENNY )Senior Managing Director , Hospi ta l i ty Divis ion

Direct: 504.569.9483 | Mobi le: 850.830.4595

lwormser@lat terblum.com

CHRIS R. ROSSDirector, Hospitality Division

Direct: 504.569.9333

cross@lat terblum.com

SMALLER .. . SIMPLER .. . SMARTER

Hospitality & Commercial Real Estate Service,Worldwide.

HOSPITALITY ADVISORY SERVICES A BOUTIQUE INVESTMENT ADVISORY FIRM

lenny nai latter & blum 2015 hospitality advisory services

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