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which were located on the West Coast , and represented US $ 240 million in purchases with another US $ 30 million in renovations planned .
Cooley and his team think this buoyant transaction market is going to play out over the next two to three years as owners and PE funds who bought assets in 2015- 2016 and had to hold through the pandemic now look to harvest their returns . “ There ’ s this kind of forced turnover ,” he says , “ It ’ s not so much driven by a lender who ’ s going to take over the asset because many assets are worth more than their financing . But it ’ s just the nature of the business causing the turnover , and we look for opportunities where we think the owner needs to sell – it ’ s a better dynamic in the buy-sell process .”
Cooley says AWH , which raises capital around each investment opportunity from a wide variety of investors , is not focused on any single market or asset type , but more on the circumstances surrounding the assets and their evaluations . “ But we do spend a lot of time thinking about markets and evaluating growth opportunities within a market , and that drives what we could pay .”
From an underwriting perspective , Cooley expects healthy revenue increases , as well as bigger cost increases . “ We are probably more sensitive in places where we think labor expenses might grow faster than inflation –
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urban environments ,” he says .
PROUD OF THE WORK Looking ahead on the performance side for this year , some existing AWH assets are forecast to reach 90 % of 2019 revenues , but more meaningfully still trailing on a profit basis . That said , Cooley says AWH is in that position based on the work it did during the pandemic .
“ We ’ re really proud of the work we did during COVID ,” Cooley says . “ We were working day and night on balance sheets , cash management and cost structures . I think we came
The Cincinnati Marriott at RiverCenter
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up with some fairly creative ideas – we sold rooftops , leased parking lots and we found longer-term groups that never would have stayed in our hotels to generate revenue in a time where there wasn ’ t any other demand … We really created value in different ways through pulling those levers on asset management in 2021 , without a question exceeding our expectations on every level .”
AWH was also “ brutally transparent ” with every single lender and investor , telling them the pandemic was going to create an operating environment worse than
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anything seen before . Cooley says that maneuver was one AWH ’ s most important takeaways that will stick with them for a long time .
“ We found that high level of communication paid huge dividends because our lenders and partners from those first calls said we were the first people telling them what was coming ,” Cooley says . “ It worked to build a rapport and then we started working on this together . We brought capital to the table for almost every single asset to smooth the way . But we received huge concessions from our lenders , too .”
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10 hotelsmag . com June 2022 |