INVESTMENT
Terrapin ’ s
simple recipe for success
AGGRESSIVE , NIMBLE HOUSTON-BASED OWNER- OPERATOR BELIEVES MORE OWNER ATTENTION LEADS TO MORE DEALS , AND A GREAT INVESTMENT PARTNER HELPS , TOO .
by JEFF WEINSTEIN , EDITOR IN CHIEF
Houston , Texas-based management company Terrapin Hospitality made a splash in late September by acquiring a friendly competitor in nearby San Antonio , Texas-based K Partners to double its portfolio to approximately 70 hotels and 7,335 rooms in 13 states . At that moment , Terrapin and its affiliates had an ownership interest in 35 of the properties , while the rest are strict third-party management deals . Now , the plan is to grow exponentially and reach , perhaps , 200 properties under management by 2025 . Additional deals are already flowing .
The K Partner portfolio comes from about 10 different ownership groups , primarily in Texas and the Southeast . “ We paid a pretty low multiple because they weren ’ t that profitable ,” Terrapin Founder and Principal Tony Sherman told HOTELS in late October . “ By absorbing them , creating economies of scale and doing things more efficiently , we think that the return on equity is very high on the acquisition … We expect this to be very creative to our earnings and cash flow in 2022 and beyond .”
With the help of significant stakeholders Waramaug Hospitality and its well-known leaders Paul Nussbaum and Leslie Ng , the game plan is to keep acquiring branded midscale and upper-midscale hotel contracts and perhaps more portfolios . Of Terrapin ’ s current portfolio , Boca Raton , Florida-based Waramaug owns 23 hotels . In total , Waramaug ’ s hotel portfolio sits at 40 owned properties .
“ Tony Sherman and his team at Terrapin are excellent operators ,” Ng says . “ They drive superior margins and keep things simple . They hire the best talent in the market for each hotel and provide the necessary corporate support to let their hotel managers excel , all without burdening the field with unnecessary corporate meddling . This results in lower costs to the hotels with significantly better operating results . We definitely saw a strong opportunity to grow this platform ;
GROWTH IS REALLY GOING TO COME FROM BUYING OTHER MANAGEMENT COMPANIES AND EARNING MORE MANAGEMENT CONTRACTS FROM EXISTING OWNERS AND NEW OWNERS .
– TONY SHERMAN
24 hotelsmag . com January / February 2022