Marriott-Branded Portfolio

• This offering presents a rare opportunity for an investor to acquire the 182-key portfolio, comprising two premium-branded assets—a SpringHill Suites by Marriott and a TownePlace Suites by Marriott—that are located next to one another and benefit from their capture of both transient and extended-stay demand.

Upside Opportunity in NOI Flow-Through for a Robust Operator

• Per the combined September 2023 trailing-twelve-month (TTM) profit-and-loss (P&L) statement, the portfolio achieved a gross operating profit (GOP) of 35.0%.

• Based on a selection of similar Marriott-branded, extended-stay and limited-service hotel operating statements, the portfolio should achieve a stabilized GOP margin between 44.0% and 50.0%.

• The portfolio offers operational efficiencies of key property-level functions including a shared General Manager, Director of Sales, Chief Engineer, and Sales Coordinators, allowing for reduced payroll costs and higher NOI flow-through.

• The local market has experienced a strong post-COVID recovery. Per the November 2023 STR Trend Report and TTM data, room-night demand for upscale hotels in this Houston/Baytown submarket increased by 17.8%, compared to the same period last year.

Strong-Performing Assets

• In 2023, the portfolio achieved $5,200,000 (rounded) in rooms revenue.

• The SpringHill Suites by Marriott includes over 9,000 square feet of meeting space and a fully equipped commercial kitchen for banquets, as well as ample parking; thus, over $450,000 (rounded) in additional revenue was earned in the YTD 2023 period.

• Per the November 2023 STR data, the two hotels dominated their respective competitive sets, with the SpringHill Suites by Marriott having registered a 117.6% RevPAR penetration index, and the TownePlace Suites by Marriott having achieved a 119.6% RevPAR penetration index.

• Over the next twelve months, the portfolio is expected to generate $6.0 million in gross revenues, leading to $1.7 million in NOI flow-through.

Well-Maintained, High-Quality Physical Products Priced Below Replacement Cost

• Current ownership has maintained the physical assets well.

• In 2021, the SpringHill Suites by Marriott’s lobby underwent a renovation, while the guestrooms also received new softgoods that year.

• Given the TownePlace Suites by Marriott’s opening in November 2018, it was constructed with the most recent brand design requirements; thus, a minimal change-of-ownership PIP would be expected.

• Based on the current pricing guidance, the properties are priced below replacement cost. To construct similar assets with comparable amenities, the estimated all-in investment would be a minimum of $150,000 per key.

Robust Oil & Gas/Petrochemical Industry

• Local refineries and chemical plants operated by major companies, such as Chevron Phillips and ExxonMobil, represent primary economic anchors in this Houston/Baytown market.

• In 2023, the U.S. Department of Energy (DOE) selected the Houston as one of the seven regional clean hydrogen hubs in the nation, which will receive $1.2 billion in federal funding for clean energy projects. The City of Baytown has announced that multiple companies have already begun to explore potential expansions here. According to the DOE, the Gulf Coast hydrogen hub is expected to create over 35,000 in construction jobs and 10,000 permanent jobs upon completion.

• This past December, John Cockerill Hydrogen, a Belgium-based manufacturer, completed its purchase of a new manufacturing facility in Baytown. The acquisition represents the initial phase of a new alkaline electrolyzer gigafactory that is expected to be fully completed and ramped up by 2026. The project is anticipated to generate thousands of temporary construction jobs and 200 permanent jobs at completion.

• Calpine recently announced that its Baytown decarbonization project has entered into a cost-sharing agreement with the DOE that will include up to $270 million in federal funding to build a new commercial-scale, carbon-capture, and storage facility. More details are expected over the coming months as the two parties continue ongoing negotiations.

• As part of ExxonMobil’s larger ten-year, $20-billion “Growing the Gulf” expansion program, ExxonMobil added a new ethane cracker unit in 2018 and recently started on a $2-billion expansion of its chemical complex in Baytown this past September.

• OxyVinyls, the chemical division of Occidental Petroleum, has set in motion a planned $1.1-billion expansion of its chlor-alkali plant in La Porte.

• The Bayport Container Terminal is undergoing a $200-million investment project to update its storage facilities and infrastructure, including the addition of a new, 1,000-foot wharf to aid in the expected increase of cargo volume in the coming years.

Favorable Location along Interstate 10 near Corporate & Leisure Demand Generators

• The properties are strategically located at the Garth Road Exit along Interstate 10 within a heavily developed commercial corridor in Baytown.

• Corporate demand generators in the area include the ExxonMobil Baytown Complex, Chevron Phillips Chemical Cedar Bayou Facility, Enterprise Products Partners Mont Belvieu Complex, Energy Transfer Fractionation and Storage Facility, Targa Logistics & Transportation Segment Facility, Covestro Baytown Facility, and Calpine Baytown Energy Center, as well as The Home Depot and Walmart distribution centers, JSW Steel, Houston Ship Channel, Frontier Logistics LP, Occidental Petroleum, Baker Hughes, and The Dow Chemical Company.

• Leisure demand generators include the Baytown Nature Center, San Jacinto Monument, Battleship Texas, Bicentennial Park & Veterans Memorial Plaza, Eddie V. Gray Wetlands Center, Fred Hartman Bridge, Lee College Performing Arts Center, Lynchburg Ferry, Pirate's Bay Water Park, Yepez Vineyard, and Lee College, as well as various youth sporting venues and golf courses. Special events also play a role during key weekends, such as The Great Harvest Festival, Baytown’s Heritage Scaritage Festival, and the HSA Invitational Tournament.