Absentee Owned With Management Upside

• The Howard Johnson is owned and operated by American Liberty Hospitality (ALH), a growing Houston-based company that is currently focused on upper-upscale hotel developments. Great upside exists for a more hands-on owner/operator to restructure the hotel’s operations, establish yield-management strategies, and initiate cost-containment initiatives.

• Per the January 2021 STR Trend Report, the Hotel ranked six (out of seven) among its competitors in terms of occupancy and five (out of seven) for average rate. A more prudent and hands-on operator should be able to recapture demand from the contract workers and transient guests traveling through Beaumont.

Strong Performance During COVID-19 Pandemic

• Despite the Property undergoing major renovations at the beginning of the year, the hotel’s performance was excellent through 2020 and finished the year at over $1.4 million in rooms revenue, reflecting a 15% increase over the 2019 amount. Economy-branded hotel assets are more recession resistant than higher-branded assets, which makes this a highly attractive hotel to own and operate.

Robust Petrochemical Market

• Based upon a report published by the South Texas Economic Development Foundation (SETEDF), approximately $54 billion of petrochemical expansion projects are underway and expected to be completed by 2030. The ongoing COVID-19 pandemic may have caused some construction delays, but all announced projects are continuing to move forward with their development.

• Some of the projects include Exxon’s $10-billion Golden Pass LNG Expansion, Motiva’s $6.6-billion project to expand its refineries and acquire two downtown buildings in Port Arthur for office space, and Valero’s $975-million refinery expansion. Local officials anticipate these projects to create over 10,000 temporary jobs and 500 permanent jobs in the area.

Vacant Adjacent Building

• The adjacent 2,780-square-foot building next to the property is currently vacant, presenting the new owner/operator multiple transformation opportunities. The building can be converted back into a rentable office space for additional revenue or into housing for an owner/operator.

• The previous tenant was a local attorney who leased the building for over 20 years with an annual rent of $36,000.

Recently Renovated

• From mid-2019 to early 2020, current ownership spent in excess of $900,000 renovating the property, which included a complete refresh of all first-floor guestrooms and new case goods for the second-floor guestrooms. The complete list of renovations can be found in the Virtual Deal Room.

• Given the recent renovations, a minimal change-of-ownership PIP is expected.

Excellent Location Among Attractive Guest Amenities and Transient Demand Generators

• The property benefits from very strong visibility and accessibility off the frontage road along Interstate 10. Based on the 2019 data from the Texas Department of Transportation, this section of Interstate 10 averages nearly 124,000 vehicles daily.

• The Port of Beaumont is a world-class intermodal transportation facility that is served by three class-one rail carriers, located within two miles of Interstate 10, and is situated on a deep-water channel with a 40-foot draft. Southeast Texas is the #1 exporter of crude in the nation, #1 exporter of liquid natural gas, and has the third-largest refining capacity in the United States.

SBA 7(a) Loan Program Enhancements

• The Howard Johnson qualifies for SBA 7(a) loan financing; please see the Virtual Deal Room for a debt quote from HVS Capital Markets.

• For any SBA 7(a) loan closed prior to September 2021, the below enhancements have been made as part of the coronavirus relief bill:

  • The borrower and lender origination fees have been waived (typically 3.25% of the loan amount).

  • The SBA 7(a) loan guarantee has been increased to 90% for the lender (typically 75%).

  • The loan provides up to $9,000 per month for three months toward the principal and interest payments.