Leveraging the Hotel Real Estate Cycle for Superior Returns

Innovators at Excel Group Talk About Staying Ahead of the Game

. April 24, 2014

WASHINGTON, D.C. - April 25, 2014 — With the U.S. hotel real estate cycle shifting from distress to growth and certain segments of the industry presenting greater upside opportunity, hotel owners are looking at strategic moves to leverage the advantages of this new phase of the cycle. 2013 marked a year of strong RevPAR growth and 2014-2015 is expected to feature an increasingly favorable environment for robust operating performance and enhanced liquidity in hotel capital markets.

Increasingly, creating competitive product at all market and sector levels has become the name of the game. As larger gateway cities and other high barrier-to-entry markets have reached saturation or otherwise exclude new players, some owners have been tapping smaller yet high growth markets to execute high yield investment strategies.

Excel Group, a recently formed private equity firm based in D.C., is one such group that is innovating and executing strategies to leverage this phase of the lodging industry cycle. Having acquired 11 assets during the downturn - both distressed, underperforming hotels, as well as institutional grade properties - the firm's goal is to create a high quality, well-branded select service portfolio.

To take advantage of the cycle, Excel Group's focus is on executing carefully chosen initiatives to maximize the portfolio's performance potential. This includes a $12 million capex injection to renovate and reposition all 11 properties. The firm plans to transform each asset into the market leader in its category, both in product and in performance. The scope of this capital injection includes comprehensive guestroom renovations, lobby, restaurant and meeting space redesign, and fitness and technology upgrades.

This also includes a re-branding and complexing strategy at the BWI Airport Hotel campus to leverage two standalone hotels, along with a leased full service restaurant, with the goal of increasing market share, and achieving operating synergies across the entire hotel campus.

The evolving lodging industry cycle also presents an opportunity to evaluate management company relationships to optimize the owner-operator-asset fit. Following an exhaustive management services RFP process, Excel Group appointed Arizona-based PHD Hospitality as manager of six of its 11 assets, based on the company's expertise in the select service segment. For Excel Group, this realignment of management company resources brings together the appropriate operating expertise with the right brands and markets, further positioning Excel-owned properties for future success.

“We started our firm in the down-cycle, and were able to source off-market deals and distressed assets in growth markets,” said Shoham Amin, managing partner of Excel Group. “Our in-house financial and legal expertise enables us to do things other firms can't, and we take pride in executing creative deal structures to create a high quality portfolio at a significant discount.”

“We're entering a new phase of the cycle,” said Romy Bhojwani, chief operating officer for Excel Group. “Now is the time to leverage RevPAR growth and drive market share through innovative capex, operating and branding strategies. By creating superior product, realigning our management company relationships, and aggressively pursuing rebranding opportunities now, we will continue to drive strong operating and investment performance and deliver better-than-peer risk-adjusted returns for our investors and partners.”

About Excel Group

Excel Group is a Washington, D.C.-based private equity firm that owns and asset manages 11 hotels in high-growth markets across the Eastern U.S. Focused on disciplined, cycle-appropriate hotel real estate acquisitions and asset management, the firm specializes in value-add fee simple assets, and hotel loans. The team's in-house expertise includes investment sourcing, structured finance, asset management, capital planning, project management and complex financial and legal restructuring. The firm leverages this fully-integrated platform to identify and execute innovative value creation opportunities and consistently deliver above industry-average returns. For more information, please visit: excelgp.com

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