By David Smith Ruger
Manager of development
Aimbridge Hospitality
Know the Value of Experience
A seasoned operating partner can be the difference in hotel financing
hoTels are arguaBly The mosT
complicated piece of commercial real
estate to operate because of the na-
ture of the business. Working with hotel
and lodging deals can be just as com-
plex. Daily operations are important to
the valuation of hotels, so commercial
mortgage brokers should know how the
experience and expertise of a property’s
operating partner can affect financing.
Knowing what to look for in operating
partners and how they affect a prop-
erty’s value can help brokers advise cli-
ents as they proceed with lodging deals.
A seasoned operating partner is a
key component to any business’ suc-
cess; this is especially true in lodging.
Hotel operators have the daunting task
of managing leases that renew daily, all
of which are negotiated at varying price
points. Many external factors can also
impact a hotel’s overall performance,
including the overall economy, destina-
tion type, location within the destina-
tion, price point, positive and negative
press, and fuel prices. An experienced
management company will have the
knowledge and expertise to navigate
through these obstacles, creating value
in good times and retaining it in bad
times.
14TH ANNUAL WESTERN STATES
COMMERCIAL REAL ESTATE
FINANCE CONFERENCE
“Hotel;operators
have the daunting
task of managing
leases that renew
OCT. 5-7, 2011
daily, all of which
ENCORE AT THE
WYNN LAS VEGAS
PRESENTED BY:
are negotiated
at varying
price points.”
CALIFORNIA MORTGAGE
BANKERS ASSOCIATION
Keynote Speaker: ESPN
Founder & Pollster
Scott Rasmussen!
GO TO WWW.CMBA.COM FOR
REGISTRATION/SPONSOR INFO!
PLATINUM SPONSOR
TITANIUM SPONSOR
GOLD SPONSORS
GE Capital Real Estate
Bank of America
Borrego Springs Bank
Bolour Associates
CorAmerica Capital, LLC
Goldman Sachs
John Hancock Real Estate Finance
When choosing an operating partner,
there are many attributes owners should
seek. Three of the most important are:
1. co-investments or management
fees: Operating partners can either
be co-investors in the property or
receive management fees. Co-investment creates a platform for a
mutual alignment of interests. With
an investment, operators are not
only incentivized to maximize topline revenues but also to contain
expenses. Lower expenses means
more is brought to the bottom line,
and net operating income (NOI) is
the most important factor in determining a property’s value. Many hotel owners prefer no co-investment
or are prohibited from receiving an
investment from their operating
partner, however. In these cases, an
owner and manager can be creative
when structuring management fees.
continued on page 36 »
AEI Consultants
Allen Matkins Leck Gamble Mallory & Natsis LLP
Curtis-Rosenthal, Inc.
Johnson Capital
Newmark Realty Capital
Paci;c Southwest Realty Services
Q10|Dwyer-Curlett & Co.
TD Service Co.
David Smith Ruger has more than four years
of hospitality consulting and operations
experience. He is a manager in the development department at Aimbridge Hospitality,
where he under writes and sources deals
for potential acquisition and third-party
management. When evaluating potential
hotel acquisitions, Ruger works to identify
potential conversion and strategic repositioning opportunities. Before Aimbridge, he
worked at Capital Hotel Management near
Boston and Hospitality Valuation Services in
San Francisco. Reach him at (214) 550-5536.
