Hotels will always retain underlying real estate value no matter the economic conditions – it’s simply a matter of navigating the path to profitability. While the industry has enjoyed tremendous value and revenue growth over the years, the hotel business is now facing a series of unprecedented challenges. However, the cyclical nature of market movements presents a trained investor with incredible opportunities that can be challenging to duplicate during periods of economic expansion.
Anagram Ventures sees the coming months and years as a period of great promise for stakeholders. Through a nuanced understanding of market trends, consumer needs, and property valuations, we will identify and acquire assets that we believe are likely to yield strong returns.
At the start of every project, we stop. And we listen. To us, a deal isn’t successful until every voice at the table has been heard. By looking beyond mere facts and figures, our team is able to fully assess opportunities from a variety of perspectives, while providing value propositions others may not see.
As a private, independently owned firm with an entrepreneurial spirit, we’re unencumbered by stringent corporate protocols that all too often stymie the acquisition process. This ability to move quickly and decisively allows us to be resourceful in developing creative solutions to complex deals. No two properties are identical, and that means each deal presents a unique opportunity for success.
Real estate deals can be complicated. But they don’t have to be. By offering a streamlined approach that delivers expertise in hospitality operations, real estate deal structuring, and capital markets—all under one roof—we’re able to significantly reduce the complexity of the project cycle. This results in a speedier execution and an overwhelmingly more positive experience for all involved.
Experience shapes how we think. And how we Invest.
An affiliate of J Street Hospitality, a San Diego-based company specializing in lifestyle-focused hotels, Anagram Ventures was created to provide value for stakeholders during this new economic cycle through the acquisition, development, and sale of hospitality-related assets. Its management team focuses on urban and coastal locations in high barrier to entry markets, and has successfully invested into and developed hotel projects totaling more than $600 million.
“Talking it Through”
The owner of a property had recently begun construction of a high-rise office building. The group had similar projects and loans with the same lender for years, but in 2008, the lender exercised its Material Adverse Change (MAC) provision and elected to stop funding the development. The primary issue was that the construction had already commenced, and the owner had 25+ investors and an excavated/exposed hole in the ground.
The team behind Anagram Ventures was referred to the owner to discuss a solution with the goal of avoiding bankruptcy court. The team approached approximately two-thirds of the investors individually and engaged in direct dialogue with the lender as well as the major lien holders-the general contractor and design team. After six months, the team provided a plan that would pay the lender roughly 15% of its outstanding principal, 20% of the lien amounts to each party; and finally a combination of up-front payments and a hope certificate payable over five years to the equity partners at roughly 25% of their basis. The result was a very custom, complex, and thorough multi-party release/coordination agreement. The team was able to re-entitle and develop the project as a hotel with full completion five years later.
“A Deal Within a Deal”
This case involved a hotel that was for sale, sitting on a large parcel of land. The team saw an opportunity to either procure and flip, or simply flip the deal to a multi-family developer. The team was able to identify a buyer and negotiate a unique strategy to sell the deal while in escrow. However, the complexities grew as the seller was accused of fraud by its investors midway through the process. Its lender/receiver stepped in and served as the new owner. The team was able to renegotiate a new deal, while still juggling the pending sale to the apartment developer—all done legally and with appropriate counsel.
The team identified an office building and adjacent parcel in a very high barrier to entry market. The project was purchased as one deal, but the team saw an opportunity to separate the projects and create two unique standalone opportunities. The adjacent parcel was sold as a different use (unentitled) one year after the acquisition for over 90% of the aggregate acquisition price for both parcels. The office building was entitled and permitted as a hotel, only to be sold at a premium to an office user approximately three years later.
“A Building Reborn”
In the summer of 2014, the team identified an under-utilized multi-family building located in an A+ location. The building had been constructed in the ’80s and was designed with shared bathrooms and micro units, each averaging roughly 125 square feet. The building was laid out very efficiently, and the team recognized that with its wood frame, exterior window placement, and limited load bearing walls, every two units could easily be converted into one +/- 250 square foot hotel room. Working directly with the local housing commission, the team relocated all residents and, after a complete conversion to a hotel, sold to a buyer via an unsolicited offer at certificate of occupancy.