Operational Upside Potential for Robust Operator

• Since acquiring the asset, ownership has experienced issues with multiple management companies, employee retention, and sales efforts. Collectively, these matters have contributed to the decline in revenues and cash flow.

• Per the year-end 2024 financial statement, the hotel has suffered from a lack of operational efficiency, registering a low gross operating profit (GOP) of 14.9%.

• Based on a selection of operating statements from similar vintage Holiday Inn hotels, the hotel should achieve a stabilized GOP margin between 38.0% and 42.0%.

• The property features over 2,300 square feet of meeting space and a fully equipped commercial kitchen for catering needs to generate additional income and corporate bookings.

• Based upon HVS’s pro-forma projections, stabilized rooms revenue in 2027 is anticipated to exceed $3.2 million, with a net operating income (NOI) flow-through of $1,000,000 (rounded).

Extensive Renovations Underway

• Current ownership is in the process of completing an extensive property-wide renovation.

• The first-, third-, and fourth-floor guestrooms have already been renovated, while the second-floor guestrooms (33), lobby, and dining area are currently under renovation.

• There were some unforeseen delays encountered while completing the renovations, which resulted in a significant reduction of guestroom inventory; thus, the hotel has been operating with a limited number of guestrooms, with 20% to 35% offline since the beginning of the renovation.

Underperforming Hotel

• Due to the extensive renovations affecting guestroom inventory since May 2023, the hotel was not able renew any corporate long-term contracts and lost out on revenues to its competitors.

• Per the January 2025 STR trailing-twelve-month (TTM) data, the hotel ranked last (out of six) among its competitors in terms of occupancy and fifth in terms of RevPAR, registering a 58.9% RevPAR penetration index.

Increasing Top-Line Revenue Trend, Over $3 Million Stabilized Rooms Revenue Expected

• Despite having less guestroom inventory from the ongoing renovations this year, the hotel’s total revenues for the year-to-date period through February 2025 was up 14.4%. This trend is expected to continue as more rooms are brought back online post renovation.

• Per the STR report, the hotel’s capture of demand (occupied room nights) decreased by 10.9% for the TTM period ending January 2025, whereas the competitive set’s occupied room nights increased 8.7%, indicating an opportunity to improve the hotel’s market share. If the hotel were to capture its fair share of market demand, at a RevPAR index of 100.0%, it would be able to generate over $3.1 million in rooms revenue.

• Considering the strong submarket, and rooms coming back online, the hotel is expected to have stabilized rooms revenue in excess of $3 million, with an NOI flow-through of over $1 million (rounded).

Growing Stone Oak San Antonio North Submarket

• Stone Oak is a rapidly growing, upscale, master-planned community, experiencing significant residential and commercial expansion. Per a fourth-quarter Cushman & Wakefield office-market report, the North Central submarket registered one of the lower vacancy rates, at 14.7%, in San Antonio, while the Central Business District (CBD) recorded a vacancy rate of 21.0%. The lower vacancy rate reflects the broader trend of companies shifting towards suburban locations.

• In November 2024, Stirista, a prominent data-focused marketing firm, relocated to a larger office at The Terrace at Concord Park in Stone Oak to accommodate the company’s growth plans and efforts to expand its workforce by an additional 50 employees.

• Last September, Visionworks relocated its headquarters from Downtown San Antonio to a new, 30,000-square-foot office in the RidgeWood Park office campus in Stone Oak.

• Methodist Hospital Stone Oak is undergoing a major expansion (valued at $104 million) by adding two new floors to the West Tower, boosting capacity from 245 to 299 beds, including 14 new ICU beds. The project is slated for completion in early 2027.

Long-Term Franchise Agreement with IHG

• Upon acquisition and approval, an investor can expect a new, long-term license agreement with InterContinental Hotels Group (IHG).

• The award-winning IHG® Rewards Club loyalty program is one of the largest in the hotel industry, offering members more choices to redeem their points than any other hotel loyalty program in the world. Serving over 100 million enrolled members worldwide, IHG Rewards Club is an effective tool for driving customers to IHG hotels and creating brand loyalty.

Discount to Replacement Cost with Minor Change-of-Ownership PIP Expected

• Given the ongoing renovations, a minor change-of-ownership property improvement plan (PIP) would be expected as part of the franchise transfer.

• This opportunity presents an investor with the ability to acquire the property at a price well below replacement cost, at $110,000 per key.

• To construct a similar asset with comparable amenities, the estimated all-in investment would be a minimum of $150,000 per key.

Excellent Location Among Numerous Regional Demand Generators

• The property is strategically located in the Stone Oak submarket near a dense commercial development corridor just north of the U.S. Highway 281 and Loop 1604 interchange.

• Commercial demand generators in the area include the office campuses of RidgeWood Plaza I & II, Marathon Petroleum Corporation, Silotech Group, Black Brush Oil & Gas, EOG Resources, Stakeholder Midstream, Millenium PetroCapital Corporation, Energy Transfer Partners LP, iHeartMedia (headquarters), Methodist Hospital Stone Oak, and San Antonio Christian School.

• Leisure demand generators include TPC San Antonio Golf Course, Six Flags Fiesta Texas, Seaworld & UTSA, the San Antonio River Walk, and the Alamodome.

Fully Unencumbered by Management

• The hotel asset is being offered free and clear of any management encumbrances, providing an investor with the flexibility to revamp the operational strategies of the current management company.