Boutique Large Group Format Hotel in Growing Market

Project Details

Background

The proposed 6602 Nebraska Street project is a 5-unit boutique apartment hotel designed to cater to larger groups. It will offer 5, 10 bedroom apartment-style short term rental units, with the prime location conveniently adjacent to new residential projects in Seminole Heights and Tampa Heights.

6602 Nebraska will be a licensed and permitted hotel. This insulates and helps protect us from any potential regulation on short term rentals in the Tampa market. Additionally it is a much more attractive acquisition for institutional investors.

Program

Each of the 5 2900 sq ft hotel units will include 10 bedrooms. Guests enjoy the comforts of an entire home with full kitchen/living areas for rates much more affordable than a hotel room. Shared amenities feature an outdoor pool, patio and grills. High-end furnishings and custom local artwork complete the upscale but authentic neighborhood vacation experience.

Timeline

We have started architect discussions with a conservative construction start date set for January 2025. The 10-12 month schedule targets completion by November 2025 for a January 2026 opening, with stabilized occupancy by June 2026. (Note: the model assumes an open date of April 2026 to account for some stabilization)

• Contractor Selection: November 15th, 2024
• Building Permit Approved: January 15th 2025
• GMP Contract Executed: January 15th 2025
• Loan Closing: January 15th 2025
• Construction Start: January 15th 2025
• Construction Period: 10-12 months‍
• Substantial Completion: November 15th, 2025
• Commencement of Operations: January 15th 2026
• Stabilized Occupancy: June 2026

Location Details

Tampa Hospitality Market

Tampa’s hospitality market continued strong growth coming out of the pandemic, with 2023 setting new tourism records including over 26.7 million visitors. This drove Hillsborough County hotel revenues to nearly $1.1 billion, boosted by robust average daily rates up 7% in 2023. Nine new hotels brought 1,100 in new room supply, still only 2% of total stock. Sales of $218,000 per room also rose across 33 hotel transactions in the county.

Major drivers attracting travelers are Tampa’s highly rated beaches like nearby Clearwater Beach, attractions including Busch Gardens, and a packed sports and event calendar. Tampa International Airport’s accolades for customer satisfaction add appeal. Hotel projects remain active with another 1,300 rooms slated by 2025.

Local Neighborhood

The site lies just north of vibrant Tampa Heights, and the six-block Seminole Heights corridor surrounding the site added 4 restaurants, a renovated theater, offices, and 166 residential units recently. Hundreds of more high-end rentals and condos are planned or underway. The area maintains its historic charm of craftsman bungalows and brick streets while appealing to young professionals and families.

The location allows our project to tap into greater Tampa’s expanding visitor demand and growth, while offering guests an authentic neighborhood experience perfectly suited for the short-term rental/apartment hotel concept.

Project Thesis

Catering to Group Travel

The broader hospitality industry continues to adapt to changing traveler preferences stemming from the growth and adoption of Airbnb and Short-Term Rentals. Hotels remain focused on individual business travelers, while vacationers increasingly look for lodging options that accommodate group trips and family gatherings.

Share of People Who Prefer to Travel as a Group is Growing (data from Statista)

Traveler Preferences are Shifting from Hotels to Airbnb (data from Skift)

We have directly witnessed this trend through our portfolio of 30 units already operating successfully in Tampa and New Orleans based on this group-focused model.

Demonstrated Resilience

Short-term rental/apartment hotels generally outperformed traditional hotels through recent downturns by offering more flexibility. The proposed development further minimizes risk as the concept has been proven in New Orleans, but this project will be a first mover in a Tampa market that has extremely similar tourism demographics to New Orleans.

Financial Details

Financial Overview

The roughly $7.9 million total development cost includes acquisition of the land, which is already under contract for our group. We are proposing funding with $2.60 million in investor equity and $5 million in debt financing. The developer/sponsor contributes an additional $318k of equity through cash and fee contributions. At stabilization after year 3, we anticipate roughly $457,754 in annual pre-tax cash flow and $1.09 million net operating income, with a sale at an assumed 9% cap rate projected to return 3.04x on LP equity.

Investment Structure

6602 Nebraska LLC is seeking investment partners to contribute roughly $2.60 million. All distributions from operations, refinancing and and capital transactions will be split pro rata to Sponsor and Limited Partners, subject to a promoted waterfall structure following the below terms.