High-Quality Hotel Asset

• The property has undergone extensive renovations, offering updated décor, comfortable rooms, and upgraded common areas.

• Ownership has taken excellent care of the property, ensuring it is maintained to a very high standard.

Operational Upside Potential for an Active Owner/Operator

• As an absentee-owned hotel asset that is managed by a third party (Lark Hospitality), a more active owner/operator would have the opportunity to make improvements.

• Per the 2022 and 2023 profit-and-loss (P&L) statements, the hotel registered an average gross operating profit (GOP) level of 34.4%. Comparable operating statements for similar independent or boutique hotels show a stabilized gross operating profit (GOP) margin near 45.0%.

• Multiple opportunities for improvement exist that could lead to a collective decrease in rooms expense, specifically in the payroll department.

• New Mexico has lower property taxes compared to other states. For example, the hotel’s average annual property tax has been approximately $1,600 ($40 per room) over the last two years.

Increasing Revenue Trend & Stable Operating History

• The hotel’s average rooms revenue exceeded $790,000 (rounded) in 2023 and 2024.

• Per the hotel’s year-to-date 2025 statistics report, the hotel commanded an average daily rate (ADR) of $73.95, boosting overall revenue in recent months.

Priced Below Replacement Cost

• Based on the $2,950,000 pricing guidance, the property is attractively priced at $74,000 per key.

• To construct a similar limited-service hotel asset with comparable amenities, the estimated all-in investment would be a minimum of $90,000 to $100,000 per key.

Ideal Location in a Thriving Oil & Gas Market

• The underlying Permian Basin is the top oil-producing region in the United States.

• Over the past six months, West Texas Intermediate (WTI) oil prices have remained between $70 and $80 per barrel.

Diverse Mix of Demand Sources

• Opportunities exist for group business from the energy companies, local educational institutions, and hospitals.

• Nearby attractions include the Carlsbad Caverns National Park (a UNESCO World Heritage Site), Guadalupe Mountains National Park, Sitting Bull Falls, and Roswell, known for UFO tourism.

• Carlsbad Caverns alone draws 400,000 to 500,000 visitors annually.

• Major employers in Eddy County and nearby Lea County include Halliburton, ConocoPhillips, Chevron, Baker Hughes, Patterson-UTI Drilling Co., and Lea Regional Medical Center.