NOT OPEN TO GENERAL SOLICITATION
Sage Equity Partners (”Sage”) is seeking to invest alongside Crescent Real Estate, LLC (“Crescent”) who is purchasing Kimpton Hotel Monaco Denver – a 189-key full-service hotel located in the heart of Denver’s Central Business District (“CBD”).
Highly Attractive Basis: Crescent’s all-in basis of $78.3 million is approximately 30% below estimated current replacement cost and includes of $7 million of guest facing infrastructure upgrades.
Great Location: Centrally located within downtown Denver with immediate access to LoDo, RiNo, and minutes away from leading attractions such as 50,000-seat Coors Field, 20,000-seat Ball Area, 76,000-seat Empower Field at Mile High, walking distance to the 584,000 square foot Convention Center, and a block away from the 16th Street Mall.
Identified Cost-Savings & Operational Efficiencies: Crescent will replace existing hotel management with a more efficient operator, HEI Hotels & Resorts. HEI has identified $783,000 in operational efficiencies which will result in approx. 16% of additional income flow through to NOI. HEI has reliably generated between 94% to 106% of underwritten cost savings on Crescent assets.
Modern Boutique Hotel: Kimpton invested $30 million in 1998 to redevelop the existing buildings. Between 2015 and 20198, Xenia the current owner, invested $10.7 million to fully over guest rooms, bathrooms, lobby and made updates to the Panzano and meeting spaces.
Generous Incentive Package: Crescent identified the Hotel as a strategic asset for Kimpton Hotels in Denver to continue to operate the hotel as a Kimpton. The incentive package includes $3.0 million of ‘key money’ along with discounted franchise fees. The ‘key money’ will be re-invested into the property to upgrade the guest experience and reduced franchise fees will enhance investor cash on cash returns.
Potential Upside Opportunities: The 2,155 square foot AVEDA spa formerly located in the ground floor retail space along Champa Street, was shut down and vacated during the pandemic. While Crescent underwrote zero projected income from this space, there is a significant ROI opportunity in transforming the space. Considerations for the space include leasing to an alternate spa concept, capturing the space for a member’s lounge as a room upselling opportunity, or building out a grab-n-go market and coffee concept.
Strong Hotel Brand: AAA Four-Diamond boutique hotel and is expected to be the only Kimpton Hotel in Denver
Sage Equity Partners anticipates maintaining this asset for a traditional hold period of 5 years. Business Plan attributes are as follows:
Cost Savings & Operational Efficiencies: HEI will replace Kimpton as manager and execute on our previously identified cost-savings and operational efficiencies to the tune of $783k.
Renovation: Crescent will initiate our $7.8 million modernization of the elevators and renovations to the façade, Panzano restaurant and meeting spaces which will complete thee total renovation of the hotel following the Seller’s successful improvements of the guestrooms, bathrooms, and lobby. Given the lack of IHG product in the market and on the heels of a full remodel, the Hotel is well-positioned to capture and outsized share of brand loyalists and other customers.
Ground Floor Activation: Crescent aims to activate the ground floor, street-facing retail space as a further upside opportunity to capture additional revenue.
Refinance: The base case assumes a refinance in Year 3 as Crescent anticipate spreads to normalize which would result in $6.1 million of estimated net proceeds to be distributed to the equity.
Exit: We underwrote an exit in Month 60 (October 2027) upon realizing the growth generated from our renovation and the stabilization of the asset thereafter. The majority of Limited Partner returns are projected to be generated by cash flow vs. reversion, providing downside protection in a down marker and potential for am upside exit in a favorable capital market environment
Timing of Funds:
November 1st, 2022
Timing of Close:
November 15th, 2022
In 2016, John Goff combined the resources of Crescent Real Estate Holdings and Goff Capital Partners to establish and lead the capital campaigns for the GP Invitation Fund I, a private, invitation-only Fund that raised $200 million and allowed for more than $4 billion in investment capacity. The Fund, focused on properties in the U.S., partners with long-standing institutional relationships. The unique structure of the fund allows Crescent to be strategic in timing, property type, and the structure in which it invests. This flexibility has been critical to past success and is even more important given today’s market climate. Today, Crescent manages in excess of $5.3 billion in real estate assets and securities. The Fund will continue to purchase assets and pursue development opportunities in line with its strategy to increase the overall value of the portfolio.