This a Real Estate Development course that is been virtually completed. ONLY THE HIGHLIGHTED ONES NEED TO BE WORKED ON. However, the entire project needs to be reviewed carefully before you do the Highlighted ones. the guideline is the last file. deadline is important.
REE 6715 RXT 1208 Real Estate Development Professor Dr. William Hardin Final Development Project Fall 2020 Joseph Tapley Yamilee Migliori Alejandro Guerrero Tyler Martin Pamela Armistead Saka Ntiamoah December 23, 2020 Aloft Hotel at 501 S.E. 24th St. in Fort Lauderdale 14-story, 138-room, + 140,000 square feet Table of Contents Executive Summary…………………………..……………………… 2 Description of Property….……………………..…………………….. 4 Market.……………………………………..………………………….. 6 Market Growth.…………………..…………………………………...12 Development Costs……………….……...…………………………….26 Financial Analysis...…………………………………………………...30 Summary and Conclusion…………………………………………….51 Exhibits……………………………………………………………….. 52 Executive Summary The “investor group” is a private real estate developer based in the South Florida market that endeavors to develop their first Hotel. The group has previously acted in the capacity of an investment consortium making strategic investment on the public market. The intent of the project is to serve as lodging accommodations for the Port of Everglades pre and post cruise business, leisure transient and local corporate. The current market of Fort Lauderdale is currently depressed due to the COVID-19 pandemic but is anticipated to rebound in the coming years while the Hotel is under construction. Prior to the pandemic the COVID pandemic this Port was one of the busiest cruise ports in the world. Based on the timing of construction and anticipated recovery we are confident the timing of this project is a sound business decision. The Aloft Fort Lauderdale will target revenues of approximately $7.2M in the first year of operations with net operating income of $2.6M. The stabilized year of operations is forecasted to achieve an occupancy level of 80.6%%, total revenues of $8.2M and net operating profits of $3.0M. The equity required to execute the project is $11M, which will be a contribution by the investor entity to cover the land acquisition, construction, equipment and on boarding of the manager. The Hotel will be operated under a long-term management agreement with Marriott Hotels and Resorts. The marketing strategy will allow us to communicate brand values, develop a unique offering for customers and maintain close relationships with suppliers to ensure the needs of guests are met in an effective manner. Growth will take place by continued recovery and targeting new areas of business within the local market. Operating Summary - Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Hotel Keys 138 138 138 138 138 138 138 Occupancy 77.6% 79.9% 81.1% 80.6% 80.3% 80.2% 80.2% Growth Rate -- 3.0% 1.5% -0.6% -0.4% -0.1% 0.0% ADR $139.28 $143.83 $148.92 $154.28 $158.22 $162.78 $165.15 Growth Rate -- 3.3% 3.5% 3.6% 2.6% 2.9% 1.5% Rev PAR $108.08 $114.92 $120.77 $124.35 $127.05 $130.55 $132.45 Growth Rate -- 6.3% 5.1% 3.0% 2.2% 2.8% 1.5% Room Rev 5,444 5,789 6,083 6,263 6,400 6,576 6,672 Gross Rev 7,265 7,694 8,052 8,256 8,412 8,633 8,778 GOP 3,135 3,498 3,735 3,834 3,911 4,016 4,081 NOI 2,590 2,920 3,050 3,049 3,028 3,110 3,160 Description of Property The land parcel to be acquired for development is located at 501 SE 24th Street, Fort Lauderdale, Florida. Total area of the land parcel is 0.92 acres. The plan is for a total square footage build of 140,000, 14 stories and 138 guest rooms with an adjacent garage with 100 parking spaces. Property amenities per brand standards will include the W XYZ Bar and Fuel. W XYZ BAR is a lounge atmosphere serving cocktails and bar snakes in a lively environment. Fuel is a grab n’ go concept that is open morning to midnight while also providing made to order breakfast items. The guestroom configuration will feature a combination of bedding types of either two queen beds or one king size bedded room. All rooms will include fold out couches to eliminate the need for folding-out beds. The total inventory will include ten 1-bedroom suite units approximately 7% of the total available rooms. Market The greater Fort Lauderdale area includes over 25,000 hotel rooms (midscale product tier and up), with a total of 31,000 hotel rooms. Hotels in and around Fort Lauderdale range from newer takes on small, old Florida beach motels to luxury high rise with every possible amenity. Competition Analysis Aloft Hotels is open space and spirited in its product style and delivery. The approach is to bring people together in purposeful environments with vibrancy. Fort Lauderdale has 300 miles of intercostal waterways as well is referred to as the Yacht Capital of the World with 100 marinas and 50,000 registered yachts .The Fort Lauderdale market contains a number of sub-markets. The subject property is being developed in conjunction with the Cruise Ports therefore is focused on a clientele in the area for the business or leisure activity related to the ports. The competitive set detailed below are competitors that will be used to measure performance as a next step in the feasibility process as well on going using Smith Travel Research. Competitive Property Guestrooms Meeting Space Square Meters Renovated Subject - Aloft Fort Lauderdale 138 641 Renaissance Fort Lauderdale - Cruise Port 236 1,193 2016 Hyatt Place Fort Lauderdale - Cruise Port 126 102 2012 Embassy Suites - Hilton Fort Lauderdale 361 1,208 2014 Four Points by Sheraton Fort Lauderdale 112 79 2017 Hilton Fort Lauderdale Marina 595 1,951 2020 Competitive Set Average 286 907 Market Growth Recovery in the market is expected to start in the year 2021 based upon introduction of a vaccine in 2020 to address the pandemic. With that said there is no timeline for the cruise operations to start again. The most significant cost in the cruise industry is fuel as a result lower oil prices this may be a benefit to cruise lines. Cruise lines have already started to advertise huge discounts on the packages for 2021. Based on CBRE’s projections occupancy in the Fort Lauderdale market is expected to reach 77.6% by 2023, which is in line to 2019’s results. Development Costs Development Summary (000's) Category $ Per Key % Land $3,381 $24,498 11.05% Building Constr. & Site Improvement $16,827 $121,938 55.00% Soft Costs $3,365 $24,388 11.00% FF&E $2,754 $19,953 9.00% Pre-Opening & Working Cap. $2,448 $17,736 8.00% Miscellaneous $1,820 $13,191 5.95% Total $30,595 $208,514 0.00% Financial Analysis Summary and Conclusions DIFFERENT. BY DESIGN. Bursting with a vibrant social atmosphere and a competitive price point, travelers around the globe are seeking the Aloft experience. With 189 hotels across 28 countries and 5 continents, Aloft has taken the industry by storm, stealing market share and gaining third-party recognition while its raving brand fan base continues to grow. The time to build is now. Let’s go. 2019 FRANCHISE HOTEL PERFORMANCE* Average Occupancy Rate 74.0% Average RevPAR $108.20 Loyal Customer Base Average Percentage of Loyalty Program Contribution to Occupancy at Aloft Hotels is 47.6% Lower Cost Bookings Marriott’s channels generate 76.5% of Aloft Hotels’ reservations