Indianapolis Home2 Suites by Hilton®
A 113-key Home2 Suites by Hilton® located in InTech Park, one of the largest office developments in Indiana located in the well-established and rapidly growing technology and research corridor of the Northwest Office Market, and just 15 minutes drive from downtown Indianapolis and the Indianapolis International Airport.
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DETAILS
TARGET INVESTOR IRR: 14.7%
TARGET CASH-ON-CASH: 9.3%
TARGET EQUITY MULTIPLE: 2.07x
TARGET HOLD PERIOD: 7 Years
CITY, STATE | MSA: Indianapolis, IN
SPONSOR CO-INVEST ($): $1,815,625
SPONSOR CO-INVEST (%): 25% (Total Equity)
MINIMUM INVESTMENT: $100,000
CAPITAL STACK
SPONSOR/INVESTMENT GROUP
ASSET PORTFOLIO
Under Management: 32
Under Development: 5
Sagar Patel
Principal, Capital Strategy
Aakash Patel
Principal, Development
Encompassing two generations of and over three decades of hotel development and management experience, Witness Investment is a family-led vertically-integrated business that brings an experienced and critical eye to every aspect of hospitality acquisition, development, and Operations.
DEAL SUMMARY
Investment Highlights
Location Highlights – The hotel is located in InTech Park, one of the largest office developments in Indiana. InTech Park is located in the well-established and rapidly growing technology and research corridor of the Northwest Office Market, just 15 minutes drive from downtown Indianapolis and the Indianapolis International Airport and provides easy access via I-465 and I-65.
Demand Drivers – With its large talent pool and business infrastructure, Indianapolis has lured companies across industries such as aerospace & defense, advanced manufacturing, life sciences, etc. Indianapolis is also one of the largest convention cities, represented by the Indianapolis Convention Center (one of the nation’s largest convention facilities). The city is home to numerous attractions such as the Indianapolis Motor Speedway (largest sports venue in the world2) and Indianapolis Zoo (2nd best zoo in the U.S. Well-known universities include Indiana University-Purdue University Indianapolis (~30,000 enrollments).
Robust Economic Fundamentals – The Indianapolis MSA is the most populous metro in Indiana, growing 10.5% between 2010 to 2020 (~1.6x national average). It’s rated as #3 Best Relocation Destination for Millennials in the Midwest and #4 Best City for job seekers in 2021 by MoneyGeek. Real GDP was up 8.7% from 2010 to 2020 (0.8% CAGR).9 Indianapolis displayed economic resilience during the pandemic with a lower unemployment rate than the nation (1.2%-12.8% vs. 3.7%-14.4% nationally) and a faster labor market recovery (Indianapolis regained 89.3% of job losses as of Dec. 2021 vs. 84.8% nationally).
Leading Brand – Home2 Suites by Hilton is one of the fastest-growing brands in the select-service space, with an astonishing 38% of its affiliated hotels opening since the start of 2020. The desirability of extended stay hotels has been further enhanced since the start of the global COVID-19 pandemic, with the Home2 brand situated as a leader in the asset class.
Seasoned Midwest Sponsor – The Sponsor, Witness Investment, has a history spanning over three decades of investment & development in the Midwest. To date, the Sponsor has developed over 35 assets, including three in the Indianapolis submarket, and a total of five Home2 Suites by Hilton. In 2020, Hilton invited Witness Investment as a member of its Ownership Advisory Council for the Home2 brand providing access to support and help guide the direction of the brand.
Synergistic Management Team – Hotel Equities is a best-in-class hotel operator managing a portfolio of 210+ hotels and projects throughout the U.S. and Canada. Currently, Hotel Equities manages four hotels in the Indianapolis submarket, including two Home2 Suites by Hilton, which will benefit the Property given their intimate market and brand knowledge. Additionally, a majority of Hotel Equities’ management portfolio falls into the select-service hotel category.
INVESTMENT DETAILS
OFFERING OVERVIEW
Witness Investment LLC (“Sponsor”) is pleased to offer investors the opportunity to invest up to $5,446,875 in Newco LLC, a Delaware limited liability company (the “Company”) through the acquisition of limited liability interests in the Company. The Company intends to use the proceeds of the offering to capitalize the new development of a 113-room Home2 Suites by Hilton in the Park 100 submarket of Indianapolis, Indiana (the “Property”).
The Company will be investing in the Property pari passu with one other investment vehicle Intech Hotel Partners, LLC, an Indiana limited liability company (“General Partner”) managed by the Sponsor through a holding company called intech Hotel Partners, LLC (“Property Holding Company”). The Property Holding Company in turn owns 100% of Intech Hotel, LLC (“Property Owner”), and the Property Owner owns 100% of the Property. The General Partner (the “Manager”) will serve as the Manager of the Company. Affiliates of the Sponsor control the Property Holding Company, General Partner and the Property Owner. The Sponsor’s investment in the Property will be $1,815,625 of 25% of the total $7,262,500 in equity.
The minimum investment amount will be $100,000 for this offering.
BUSINESS PLAN
The business plan consists of several key components that helps to shape the competitive positioning of the Property which are outlined below:
Location
Indianapolis is one of the fastest growing cities in the Midwest and United States. The growth has been balanced and spread across many sectors including Healthcare, Logistics, Manufacturing and Pharmaceutical. In addition to industry-related growth, Indianapolis is host to several large-scale national sporting and leisure events (i.e. NCAA Final Four, College Football Playoff Championship Game, Big Ten Basketball Tournament, Big Ten Football Championship Game, NBA All-Star Game). Locally, this hotel will be located within a large business park that has over 400,000 square feet of office space which a focus on technology and research companies. The Property’s location is 15 minutes from both downtown Indianapolis as well as the Indianapolis International airport.
Regional Map
The hotel is located in Northwest Indianapolis. The Indianapolis Metro is ranked as the 34th most populous in the U.S., with over 2 million residents. The hotel will primarily service demand stemming from Intech Business Park and the technology and research corridor in the Northwest office market. The demand generators of Indianapolis have consistently brought in tourists, as evidenced by the $5.4 billion in spending by visitors in 2017 and with Downtown Indianapolis being a 15-minute drive away, the hotel also provides access to major business and leisure destinations in the city like the Indianapolis Motor Speedway, Indianapolis Zoo, Lucas Oil Stadium/Indiana Convention Center, Children’s Museum of Indianapolis and Indianapolis International Airport. The hotel also provides access to Indiana University-Purdue University Indianapolis (IUPUI) and Indiana University Health, the largest university and health system in the region.
Local Map
Home2 Suites by Hilton hotel is located within Intech Business Park near Park 100 and within four miles of local businesses such as Corteva Agiscience and ConAgra. It is five minutes from Eagle Creek Park and within 12 miles of Butler University, downtown Indianapolis, Children’s Museum of Indianapolis, Broad Ripple Park, Lucas Oil Indianapolis Raceway Park, Ascension St. Vincent Hospital, and Indiana University Health North Hospital.
Brand
Home2 Suites by Hilton is one of the fastest growing hotel brands reaching 500 hotels in 10 years. The brand offers efficiency in design and operations which has contributed to its success. The operations require less staffing and headcount than other limited service and full service hotels. Additionally, the room layouts are consistent allowing for more efficient building design and footprint to help reduce development cost and provide maximum room density within the prototypical footprint. Finally, the brand caters to leisure guests, business travelers and long-term extended stay guests as each room is a suite with kitchen features including a fridge, microwave and dishwasher.
Competitive Set
The competitive set in the immediate areas consists of the following properties that would directly compete with the Property based on brand affiliation and property type:
The average age of this competitive set is 20 years old with the newest properties being built in 2008 and 2009.
Hotel Management Team
The Property will be managed by Hotel Equities – a best-in-class hotel operator managing a portfolio of 210+ hotels and projects throughout the U.S. and Canada. Currently, Hotel Equities manages four hotels in the Indianapolis submarket, including two Home2 Suites by Hilton, which will benefit the Property given their intimate market and brand knowledge. Additionally, a majority of Hotel Equities’ management portfolio falls into the select-service hotel category.
The Property
The Property is located at 6720 Telecom Drive, Indianapolis Indiana 46278 within the Intech Business Office Park. The hotel will be an interior corridor hotel with 113 guest rooms. The Property will be included as part of the office park association given its location within the office park. The construction type will be wood frame with a combination of stone and stucco exterior.
• Lot Size – 1.443 acres or 62,868 square feet
• Existing Use – Parking Lot
• Parking – 139 spaces between onsite and provided through access easements
• Building Footprint – 19,905 square feet
• Construction Type – Wood frame
• Number of Floors: 4
Room Matrix
The mix of King rooms and Double Queen rooms is balanced to enable the hotel to cater to business travelers who prefer King rooms as well as leisure and group guests that prefer the Double Queen rooms.
Amenities
The Property will offer a variety of amenities for guests including:
• 113 suite guestrooms
• Indoor swimming pool
• Fitness Center
• Business Center
• Meeting Room
• Guest laundry
• Complimentary breakfast
• Complimentary Internet
• Complimentary coffee and tea in the lobby 24/7
• Microwave, Full-size refrigerator and dishwasher in each room
Site Plan
Sources and Uses
Financial Summary
