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Opportunity Fund

The primary function of the Prestige Hospitality Opportunity Fund -1 is to provide investors with stable distributions from operating income and growth in equity by purchasing, professionally managing and then exiting internationally branded North American hotels.

The Fund will buy, improve, and operate 3- 5 hotels which cater to consistent business travellers. The target assets would be internationally recognized brands such as Holiday Inn, Ramada, Marriott, Hilton, etc. The focus will be on Canadian hotels located in major urban centers. Purchasing non-branded hotels which would be converted into internationally branded assets through renovations, upgrades or refurbishments will also be considered.

One Fund – Many Hotels.

The primary function of the Prestige Hospitality Opportunity Fund I is to provide investors with quarterly distributions from operating income and growth in equity by purchasing, professionally managing and then selling internationally branded North American hotels.  The Fund intends to buy, improve, and operate 4-6 internationally recognized brands such as Marriott, Sheraton, Holiday Inn, Hilton Brands, etc.; with an emphasis on Canadian hotels located in major urban centres.

Prestige Hospitality Group will lever their relationships with real estate brokers, hotel property owners and industry participants to identify hotel properties for potential acquisition. Management intends to make the improvements required to increase revenues, operating income and overall asset value. The operational proceeds will be distributed quarterly while the equity growth component will be achieved through sale of the assets. The Fund Management will continually monitor the hospitality real estate market and the capital markets with a view towards maximizing the disposition value of hotel properties. While the fund intends to hold the assets for 3–5 years, Management will be opportunistic and all of the assets will be evaluated on an annual basis for disposition. Upon the sale of a hotel the profits and the invested capital will be distributed to the investors.

The highlights of the offering are:

  • Internationally branded assets
  • $5,000 minimum investment
  • Quarterly distributions from operations
  • Growth in equity realized upon sale of hotels
  • Access to cumulative 8% hurdle rate
  • 70%-90% profit sharing
  • RRSP, TFSA, LIRA RESP Eligible
  • Redemption Clause of $75,000 per quarter
  • Intended 3-5 year hold
  • Multiple assets in the Fund
  • Professionally Managed Assets

Our Process

  • BUY branded assets or assets which can be branded.
  • IMPROVE the hotels through better management, more efficient operations, and renovations.
  • OPERATE using professional managers to maximize guest experience and increase revenue.
  • SELL the hotels to maximize returns to the investors

An Industry with Opportunity

4 out of 5 of family owned business have no formal succession plans (1) creating numerous buying opportunities. The hospitality industry is changing and changing quickly. Many long-time hotel owners want to retire and enjoy the fruits of their labour but are struggling to find a workable exit strategy– few have plans for succession and feel that they are trapped. Our Fund can help. According to Benjamin Tal of CIBC, 30% of current business owners will exit ownership or transfer control of their businesses within five years. (1)

The high cost of buying a hotel means there are few buyers, creating a lopsided market where sellers outnumber the buyers. Prestige Hospitality Opportunity Fund – I was designed to make the most of this opportunity by seeking owners who are willing to sell their hotel outright or partner with the Fund by selling a portion of their business.

  • Current hotel owners are looking to partially or fully monetize their businesses
  • High capital barriers created limits new entrants
  • Aging owners are creating motivated sellers
  • Lack of succession planning propelling healthy deal flow

 

 

 

 

Benefits of Branding

Hotels in the Fund will be internationally branded hotels. International brands add value to individual hotel properties due to global distribution systems, loyalty programs, standardized quality and name recognition; resulting in higher operating volumes. Internationally branded assets are also less volatile in terms of Net Operating Income (NOI), Occupancy, and Average Daily Rate (ADR)(2) – all key metrics in determining the performance and profitability of a hotel.

(1) Inadequate Business Succession Planning – A Growing Macroeconomic Risk – Benjamin Tal CIBC Economics November 13, 2012

(2) Do Brands Matter – International Journal of Hospitality Management – John W. O’Neill

Excellence in Operation

The Fund is spearheaded by 4 Principals who are specialists in international brand management.

The Principals excel in purchasing struggling businesses and turning them into thriving enterprises. Collectively, they currently oversee 11 separate locations encompassing 7 different international brands with an asset value over $330 Million. Over the course of the last 20 years, they have operated 87 branded locations worth a total of $560 Million. The Principals currently employ over 1000 people.

They know success hinges on engaging the best talent, providing accurate direction, and supplying the right resources. As active participants in all aspects of the business, the Principals’ initiative, knowledge and experience all contribute to the success of our opportunities – to the benefit of our investors.

Simple

The premise of the Fund is simply to buy operating hotels and make them perform better. Structural enhancements and improvements in operations will cause the value of the hotels to increase.

Diverse

The goal is to spread the financial risk by buying multiple assets. This diversification is designed to reduce the volatility of returns to the investors.

Professional

Our internal systems are specifically designed to utilise industry best practices and ensure the best talent is engaged during the acquisition phase, through the daily operational management, to the sale of the property.

Please contact one of our Exempt Market Dealer (EMD) partners to learn more about the details of our offering. For EMD partner information visit www.prestigecapital.ca

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