TF Management Group, LLC, announced that it will promote deeper investment in hotel to multifamily conversions as part of its funds allocation strategy that started in 2020 and continues in 2021.
“These conversion properties are offering excellent profitability for investors,” explained TF Management Group LLC CEO Mike Zlotnik, “but they’re also the type of investment that serves communities hard hit by the pandemic.”
Demand for hotels has nearly collapsed during the pandemic. Oxford Economics cited an estimated $519 billion in lost revenue for the travel industry as a whole.
Meanwhile, the demand for affordable housing is at an all-time high. With vacated hotels standing on valuable property, more municipalities are encouraging redevelopment projects.
“The ever-present need for affordable housing has been especially exacerbated by the pandemic, as many people find their livelihoods impacted,” Yuriy Novodvorskiy, COO of TF Management Group LLC added. “These conversions are not just an excellent investment opportunity, but provide a critical value to communities—a long-term benefit that many of our investors care about and support.”
Investors are poised to benefit from these fast, relatively inexpensive conversions which are typically much cheaper than new construction projects. For example, one of TF Management Group’s successful conversion investments is the Ben Lomond Suites Hotel in Ogden, Utah which was converted to a mixed-use property now called the Bigelow Hotel and Residences. The purchase and renovation, including closing costs, was $13.52MM. The building was sold in less than 21 months for $20.55MM, representing an internal rate of return (IRR) on investment of 73.35% and 2.2X equity multiple. That is a “home run” investment by most measures.
The pandemic simply accelerated the trend towards targeting weak or foreclosed hotels for conversion projects.
TF Management Group LLC launched a specialty growth fund, Tempo Growth Fund LLC, to take advantage of this and other “value-add” real estate strategies. This fund has started to raise capital in 2020 and is planning to close by Jan 2022, investing in multiple hotel/office to multifamily conversion opportunities. Here are a few examples of such projects:
- Two extended-stay hotels, Residence Inn, conversions to housing in Winston-Salem, NC and South Bend, IN
- Two Ramada Inn conversion in Mesa, AZ and New Braunfels, TX
- Best Western hotel conversion in Longmont, CO
- Conversion of an office building to multifamily housing in downtown St. Louis, across from the Cardinals ballpark
TF Management Group LLC is a private real estate investment fund management company that implements a variety of strategies with specialization in long-term “value-add” equity deals with strong sponsors, good cash-flow and forced appreciation with proper debt leverage to maximize risk-adjusted-returns.
To learn more, please visit tempofunding.com or call (800) 289-6755.