00:01.438 –> 00:03.119
That took a little while for that to get started.

00:03.159 –> 00:03.759
How are you today?

00:04.479 –> 00:04.739
Good.

00:04.779 –> 00:10.221
I was going to say Wednesday is Sunday at Carvel, but today’s Tuesday is Monday at No Vacancy.

00:10.681 –> 00:12.742
Oh, now I want to fudgy the well cake.

00:12.842 –> 00:13.142
Thanks.

00:13.262 –> 00:13.802
I’m Anthony.

00:13.962 –> 00:15.243
Welcome to No Vacancy Live.

00:15.603 –> 00:16.463
That’s my friend Glenn.

00:16.623 –> 00:18.784
You’re watching the number one show in hospitality.

00:32.962 –> 00:33.502
Hey, everybody.

00:33.542 –> 00:35.803
Welcome to the one and only No Vacancy Live.

00:35.863 –> 00:37.164
That’s Anthony Melchiorri.

00:37.684 –> 00:38.685
I’m Glenn Hausman.

00:38.765 –> 00:41.386
It is so great to see all of you with us today.

00:41.766 –> 00:47.208
Anthony, believe it or not, just last week, I had an urge for Carvel.

00:47.708 –> 00:53.171
And I made my wife drive me to Carvel so I could eat the cone and not have to worry about driving home.

00:53.411 –> 00:58.673
If I could have ice cream without winding up in the emergency room, I…

00:59.526 –> 01:05.973
used to eat ice cream cones with double chocolate sprinkles and then a couple chocolate sprinkles.

01:05.993 –> 01:11.179
So anytime I ran out of chocolate sprinkles, I’d dip it in the cup because I’m a chocolate sprinkle guy.

01:11.699 –> 01:15.583
And one of the only freestanding Carbells

01:16.244 –> 01:18.605
It’s on Coney Island Avenue in Brooklyn.

01:20.165 –> 01:24.706
And it’s been there since literally I’m a baby, since the day I was born.

01:25.366 –> 01:28.567
And it’s one of the only freestanding Carvel.

01:28.707 –> 01:30.507
Remember the old looking Carvel shops?

01:30.968 –> 01:31.348
Of course.

01:31.368 –> 01:35.529
Yeah, we still have one on Route 25, that little standalone building.

01:35.789 –> 01:36.449
There’s not many.

01:36.669 –> 01:39.830
There’s like literally, I think there’s a couple of handfuls and that’s it.

01:40.290 –> 01:43.911
And it’s funny, I walked in there the other, not the other day, but maybe last year for something.

01:43.951 –> 01:45.211
I was getting a birthday gift for somebody.

01:46.011 –> 01:48.793
And the same guys there.

01:49.934 –> 01:52.856
Everybody’s like, it looked like just 30 years ago.

01:53.717 –> 01:53.957
Wow.

01:54.237 –> 01:57.179
That’s a, yeah, that’s freaking Carvel.

01:57.359 –> 01:57.780
All right.

01:57.860 –> 02:00.402
People don’t know what we’re talking about on the West Coast.

02:00.882 –> 02:05.005
Carvel is like an iconic ice cream shop in New York City on the East Coast.

02:05.445 –> 02:05.765
Right.

02:06.065 –> 02:06.345
Awesome.

02:06.605 –> 02:08.606
Well, did I do that?

02:08.646 –> 02:09.106
You did.

02:09.126 –> 02:09.927
And that’s kind of weird.

02:10.427 –> 02:11.287
I know it is kind of weird.

02:11.307 –> 02:12.827
I’ll put it back to our normal format.

02:12.847 –> 02:13.448
Sorry, everybody.

02:13.488 –> 02:17.329
I’m in a hotel room and the computer is not really working well for me today.

02:17.349 –> 02:18.109
All right.

02:18.329 –> 02:22.411
So, Anthony, I want to talk a little bit about hospitality industry investment.

02:22.451 –> 02:26.232
But before we do that, and when we get these gentlemen on the show, we’ll ask them about this.

02:26.312 –> 02:26.432
But

02:27.753 –> 02:32.379
Axios, which is a great non-partial news site.

02:32.459 –> 02:34.762
It’s just the facts, man, kind of a thing.

02:36.063 –> 02:43.893
They just put out an article based on a survey done by the conference board, their big nonprofit think tank focused on business.

02:43.953 –> 02:44.093
So

02:45.154 –> 02:56.079
It says executives are increasingly resigned to a world where employees don’t come in every day as hybrid work arrangements, mixing work from home and in office are now the norm.

02:56.579 –> 02:58.860
About 20, 25% of workers in the U.S.

02:58.880 –> 03:02.382
will work at home for at least part of the week, according to data.

03:03.182 –> 03:04.243
And that’s a little bit below the 47%.

03:05.763 –> 03:08.164
But at the conference board, they’re saying the battle is over.

03:08.645 –> 03:10.866
There are so many other issues CEOs are facing.

03:11.066 –> 03:11.546
What do you think?

03:12.302 –> 03:12.983
I think that’s right.

03:13.203 –> 03:15.625
I don’t think there’s anything to add to that.

03:15.685 –> 03:21.130
Listen, back in the day, you had leverage.

03:21.270 –> 03:22.231
You have no more leverage.

03:22.491 –> 03:27.875
COVID took away the leverage because the answer would be we can’t be effective.

03:28.956 –> 03:31.919
Now COVID showed you can be highly effective.

03:32.870 –> 03:33.631
Working from home.

03:34.211 –> 03:36.813
So before you could use that excuse.

03:36.853 –> 03:39.175
And that was that’s the reason everybody was in the office.

03:39.556 –> 03:40.416
Right.

03:40.817 –> 03:50.645
And COVID proved that, no, I still think like if I was running a company with 50 employees, I would mandate four days a week.

03:51.522 –> 03:54.406
And if you didn’t want to work four days a week from the office, don’t work for us.

03:55.087 –> 04:00.615
And if I couldn’t get the employees to do that, then I would go to three.

04:01.015 –> 04:02.517
And if I couldn’t go to three, I’d go to two.

04:02.537 –> 04:04.360
And if I couldn’t go to two, I’d go to one.

04:04.480 –> 04:06.503
If I couldn’t go to one, we’d all be working from remote.

04:06.703 –> 04:07.084
Right?

04:09.246 –> 04:11.909
Hey, listen, I’m working remote today.

04:12.109 –> 04:13.050
I totally get it.

04:13.310 –> 04:19.096
So the reason why I bring this up is this is a constant trend over the last number of years that we’ve been really addressing here.

04:19.436 –> 04:25.141
And I think it provides a certain amount of opportunities for people who are doing hospitality investments.

04:25.161 –> 04:27.984
And I think that’s kind of a good way to kick off.

04:28.465 –> 04:29.485
We got two great guests today.

04:29.506 –> 04:29.706
Absolutely.

04:30.126 –> 04:39.230
Number one, we have Mr. Bhavan Patel of Green Harvest Capital, their private real estate firm focused on acquiring and upgrading multifamily and real estate.

04:39.590 –> 04:50.074
He’s also being joined by Amit Patel, who’s from Spark Hotels, and they’re a privately held firm focusing on development, acquisition, and management of value-add hospitality assets.

04:50.094 –> 04:51.455
Gentlemen, it’s so great to see you today.

04:51.475 –> 04:52.135
Thanks for joining us.

04:52.861 –> 04:53.682
Thank you for having us.

04:54.262 –> 04:55.363
Yeah, for sure.

04:55.383 –> 04:55.923
All right.

04:56.224 –> 04:59.026
So, um, Bob and you guys have been out there.

04:59.066 –> 05:01.588
You’ve been deploying a whole lot of capital.

05:01.648 –> 05:06.711
When we first connected, it was something like $80 million over the last year with another 40 million to go.

05:07.032 –> 05:07.212
Sure.

05:07.332 –> 05:08.933
Some of that’s been deployed.

05:09.353 –> 05:15.358
So let’s get the big picture on how you are seeing the state on hospitality investment today.

05:16.078 –> 05:17.940
Yeah, no, thank you so much again for having us.

05:17.960 –> 05:18.740
Great to be on the show.

05:20.572 –> 05:28.635
You know, Glenn, we’ve been fortunate enough to deploy around 160 million over the last 12 months in brands across the Midwest.

05:29.095 –> 05:34.496
And, you know, we’re seeing this, you know, from our perspective, this once in a generation shift, right?

05:35.637 –> 05:41.539
Property improvement plans were greatly deferred through the pandemic for mom and pop operators and institutional players.

05:42.119 –> 05:49.081
There is a retirement trend with baby boomers of Indian origin in the hotel industry kind of retiring and coming back.

05:50.134 –> 05:58.138
point of, you know, hey, do I want a 15 year license extension with a two to five million dollar pip or is this a time that I sell?

05:58.378 –> 05:58.598
Right.

05:58.718 –> 06:02.440
And I think that’s the opportunity that we are capitalizing on.

06:03.701 –> 06:08.063
We also see a tremendous opportunity to add technology to hospitality.

06:08.183 –> 06:11.745
And I think, you know, Marriott, Hilton, IHG, everybody’s doing a great job

06:12.545 –> 06:14.007
of connecting our hotels.

06:14.287 –> 06:23.754
And as we look at doing these property improvement plans, we’re very much leaning into building out IoT devices and a cloud-based property management system.

06:24.455 –> 06:28.538
You know, I think Anthony made a great point about, you know, number of workers, right?

06:28.638 –> 06:38.746
I think we’re all trying to understand over the next five to 10 years, how do we automate or optimize a lot of our operation, front office and back office?

06:39.426 –> 06:46.195
And how do we add that value so that we can drive a better number to our bottom line and deliver a better guest experience?

06:46.496 –> 06:50.461
So what we’re really talking about here is a lot of different factors are happening.

06:50.901 –> 06:52.624
Opportunity is coming from

06:53.494 –> 07:09.969
the older generation retiring, and then you almost having a clean slate from what to do with those properties, which helps you reposition them and reinvent them for a modern era with a modern workforce that’s going to do more with technology.

07:10.030 –> 07:14.454
So Amit, you’re working with a company that’s doing this joint venture with them.

07:14.794 –> 07:15.775
How do you see it?

07:17.315 –> 07:20.256
You know, from my perspective, the timing is everything.

07:20.436 –> 07:29.759
So our ability to capitalize on hotel assets that are obviously are going are going to be undergoing a PIP.

07:29.779 –> 07:31.199
So it’s a value at play for us.

07:31.619 –> 07:34.920
So it’s the basis that we go into these deals that really makes sense.

07:34.960 –> 07:39.782
And the timing was right for the last 12 months for us to transact across hotels.

07:40.862 –> 07:45.846
You know, IG Hilton and Marriott properties in the Midwest, as well as Mid-Atlantic and Northeast area.

07:46.426 –> 07:55.354
And based on our relationships, right, we have a lot of relationships in the industry that we’ve created with major hotel groups, with franchisees, with brokers.

07:55.774 –> 08:02.819
And those relationships have cultivated into us being able to transact in a very tough debt environment.

08:02.980 –> 08:04.020
And we did it really well.

08:05.181 –> 08:06.562
And I would say…

08:07.918 –> 08:10.318
It all comes down to the basis from our perspective, right?

08:10.358 –> 08:22.340
Going into the deal at a low basis, being a value-add player, transforming the hotel around from not only from a PIP standpoint, from management standpoint, and really coming out of it at a much value-add play.

08:22.821 –> 08:33.402
When you say, if you could, because we have a lot of young people in college, when you say my cost basis, explain what our cost basis is so people that are as familiar as we are, what do you mean?

08:33.702 –> 08:37.223
It seems self-explanatory to them, but I just wanted to make sure that we’re always teaching.

08:38.427 –> 08:43.790
Yeah, so in basic format, we look at things on a per-room basis or a per-key basis.

08:44.350 –> 08:48.933
And so when we analyze hotels, we look at two things, right?

08:48.953 –> 09:07.283
We look at the multiple of revenue, right, that we can get into this deal, and then we look at the cap rate of each hotel, and we kind of do a blend analysis, and we look at what is the ideal purchase price based on the per-key basis, and then our basis according to what…

09:08.254 –> 09:16.100
whatever the market is maybe selling for or whatever the seller previously bought for, you know, maybe it was two or three years ago, pre-pandemic.

09:16.540 –> 09:22.324
And we’re coming in at a price point that’s more idealistic of what today’s market transaction should be.

09:22.985 –> 09:27.368
And that basis is typically low based on obviously a revenue basis.

09:27.788 –> 09:34.612
the running the current, like we’re looking at the trailing 12 of the P&Ls and also looking at what replacement costs are, right?

09:34.692 –> 09:36.994
How do you manage that process when you’re raising capital?

09:37.014 –> 09:43.738
Because you don’t want to give away your hand for the price of the building saying, I know how much upside there’s at 10%, 20%, 30%.

09:44.278 –> 09:46.279
And you want to build that in.

09:46.579 –> 09:48.841
But how do you negotiate that without

09:50.508 –> 09:53.412
You understand what I’m saying?

09:53.652 –> 09:56.035
Yeah, I do.

09:56.316 –> 10:00.041
It’s like, I know it’s worth $20 million, but really it’s only worth $4 million, but you know it’s not.

10:00.161 –> 10:01.522
So how do you negotiate that?

10:01.563 –> 10:02.664
How do you deal with that?

10:06.213 –> 10:07.574
Bobbin and I will use the word.

10:07.614 –> 10:09.095
We use the word price discovery.

10:12.657 –> 10:13.917
Price discovery.

10:14.277 –> 10:14.918
Love it.

10:16.218 –> 10:24.222
On this show, we just take the band-aid off.

10:24.302 –> 10:26.904
Price discovery.

10:27.144 –> 10:31.546
Realistically, Anthony, price discovery really comes around the fact that debt markets really dictate

10:32.219 –> 10:33.280
what pricing is.

10:33.300 –> 10:36.942
That service coverage ratios drive most of the conversation for you, right?

10:37.522 –> 10:39.303
If you can’t cover a one, two, five.

10:39.323 –> 10:42.305
Wait, explain that please to people.

10:43.410 –> 10:43.790
Yeah.

10:43.850 –> 10:45.290
Purchase price over NOI.

10:45.691 –> 10:57.833
So we can look at an equity multiplier or how much money an asset is making, but the ability for it to cover based on a 125 debt service coverage ratio is the maximum amount of leverage you can put on it.

10:58.314 –> 11:07.316
So even if something’s worth $10 million and you can borrow 70% of the purchase price, if the interest rates are above 8%, typically that number comes down to 60%.

11:07.356 –> 11:07.436
Yeah.

11:09.196 –> 11:10.017
There is a gap.

11:10.157 –> 11:19.222
That’s what drives, even though in a market where you know the value is 10 million, replacement cost is 15 million, purchase price will often be six to eight million.

11:19.883 –> 11:20.083
Right.

11:20.143 –> 11:32.551
And then when you’re figuring out the purchase price, it’s also critical to see how much you’re going to put into that tip, the property improvement plan, in order to get it in shape, in order to deliver those returns that you want.

11:32.591 –> 11:37.874
So how do you think about that in coordination with what you’re trying to buy a property for?

11:38.496 –> 11:38.676
Yeah.

11:38.736 –> 11:54.140
So, you know, typically franchisors, you know, all of them that we’ve interacted with and all the professionals that we work with are very forthright and open with what they want to see with an asset, depending on the age of it, timeline around it.

11:54.240 –> 11:57.281
You know, in our experience, we haven’t had many surprises.

11:57.841 –> 12:01.162
I know that that has not always been the case when you do an acquisition.

12:01.262 –> 12:01.442
Right.

12:02.122 –> 12:13.673
So when we negotiate, you know, we’re in parallel, right, where we’re negotiating a purchase price while we’re having conversations with the franchisors and we’re trying to understand how much capital is going to be invested into the property.

12:14.093 –> 12:17.196
Typically for 100 hotel keys, it’s between two and five million.

12:17.897 –> 12:24.243
And a component of that, you know, will be refresh interiors, the technology side and then the exterior.

12:25.364 –> 12:25.684
And so.

12:26.943 –> 12:42.626
Coming to terms with our debt partners and the sellers to a agreeable price has been our strategic advantage because I think the sellers that have to sell in this market don’t have more than 12 months or 24 months.

12:42.666 –> 12:45.526
They’ve already postponed their pips long enough.

12:46.126 –> 12:53.708
And the franchisors are motivated to find institutional quality groups that are looking at the property as an asset, right?

12:53.768 –> 12:54.508
Interesting, right.

12:55.308 –> 12:55.528
Yes.

12:55.828 –> 13:02.551
And that really kind of frames where we are transitioning overall, particularly in the Indian American community.

13:03.172 –> 13:03.452
Right.

13:04.132 –> 13:16.718
Because the first generation spent their time finding their place, figuring out that first business and raising all of you guys that are now taking over with much more.

13:17.538 –> 13:27.285
serious and sophisticated way because you’ve had the opportunity to learn from your parents and do the schooling and have that inside out understanding of operations as well.

13:27.725 –> 13:36.651
So, Amit, one of the things that I find curious is I think the brands definitely have an understanding of what they want, but I also think you guys do as well.

13:36.771 –> 13:45.497
When you go in and you say, we’re considering buying this, you probably already have four or five brands that you feel that you’re probably circling around.

13:47.478 –> 13:50.763
doing it sometimes because those brands are available in the area.

13:50.883 –> 13:52.546
Other times the bones dictate that.

13:52.606 –> 13:53.227
How do you see it?

13:54.158 –> 13:58.822
Yeah, we have a little bit of a sweet spot of what we kind of like our profile, what we go after.

13:59.162 –> 14:01.584
And we look at a lot of different factors, right?

14:02.004 –> 14:07.168
Particularly, we like to stay within the IHG, Hilton, Marriott, Select Service or Extended State world.

14:07.869 –> 14:11.151
And we look at markets where they’re a little bit more mature, right?

14:11.171 –> 14:14.234
So there’s at least more than 10 demand generators in the market.

14:14.574 –> 14:15.775
There’s barriers to entry.

14:15.835 –> 14:17.857
So we know there’s no new supply coming to the market.

14:18.297 –> 14:19.558
And then the age of the asset, right?

14:19.578 –> 14:28.905
So how much capex are we going to put into this, whether it’s not only the PIP, but also deferred maintenance, owner related stuff that we want to implement, whether it’s technology like Bob had mentioned.

14:29.225 –> 14:32.388
But we really want to go in and transform the hotel.

14:32.948 –> 14:44.657
And so we factor in all these things and we kind of implement a strategy that really we believe that can really benefit the hotel and the outcome after the PIP is completed and all the capex dollars being put in.

14:45.057 –> 14:47.138
And then franchisees get really excited about that, right?

14:47.158 –> 14:53.462
Because we’re entering some of these hotels like the Courtyards or the Hamptons, the Holiday Inn Expresses of the world or the Stay Bridges or the Homewoods.

14:53.942 –> 14:58.405
Those are the type of assets that we like to go after because there’s a lot of loyalty to those brands, right?

14:58.445 –> 14:59.706
Oh, yeah.

15:00.066 –> 15:07.350
It’s the go-to for not only business, corporate leisure or group business, but also leisure like sporting teams, right?

15:07.391 –> 15:08.571
That’s a huge business today.

15:08.591 –> 15:08.671
Yeah.

15:10.192 –> 15:11.832
We all want to tap into it, right?

15:11.872 –> 15:15.053
And so we have a courtyard, a huge hockey team stayed this past weekend, right?

15:15.073 –> 15:16.774
And then we have a long relationship with them.

15:16.814 –> 15:19.474
So we’re just seeing a lot more of that type of business.

15:19.514 –> 15:24.055
And there’s a lot of loyalty to brands that we got to make sure we upheld the standards in these hotels, right?

15:24.435 –> 15:30.597
And not just like cut costs from different corners, but really, really, really bring in an ideal, unique guest experience, right?

15:30.617 –> 15:31.137
That’s important.

15:31.596 –> 15:34.339
You know, and you bring up something that I think is really, really important.

15:34.359 –> 15:35.800
There’s a couple of things I want to talk about that.

15:36.161 –> 15:43.168
When you say we’re, we’re making sure that we’re building that loyalty, we’re keeping that loyalty and we’re running the hotel the right way.

15:44.049 –> 15:49.515
First generation, find it, move you guys into the hotel, needs a family.

15:50.026 –> 15:50.807
run a business.

15:51.047 –> 15:53.048
Either one of you lived in a hotel when you were younger?

15:53.588 –> 15:56.430
We both grew up in a hotel.

15:56.450 –> 15:59.532
Don’t forget, you got to bring the cousins over too so they could open hotels.

16:00.592 –> 16:03.914
Every single cousin that came from India owns a motel now.

16:05.515 –> 16:06.196
That’s my point.

16:06.236 –> 16:10.158
My point is I tie that into barrier to entry.

16:11.605 –> 16:18.847
And I smile when Glenn said kind of when you look at a hotel, when you look at it, like you guys know.

16:18.947 –> 16:20.668
It’s like as easy as putting your watch on.

16:21.208 –> 16:22.228
It’s like that’s the deal.

16:22.288 –> 16:22.968
That’s the brand.

16:23.008 –> 16:23.728
That’s what we’re doing.

16:23.748 –> 16:24.469
This is how we’re doing it.

16:24.509 –> 16:25.709
This is how much we’re going to make.

16:26.069 –> 16:27.009
I’m on to my next deal.

16:27.089 –> 16:27.850
It’s over.

16:27.910 –> 16:28.730
It’s done.

16:28.850 –> 16:32.511
It’s like when you’re doing this for as long as we’ve been doing this, you know it.

16:32.751 –> 16:34.452
Like I said, it’s easy as putting your watch on.

16:34.772 –> 16:39.273
And when other people say challenging you, you’re like, all right, I got to move on because this is done.

16:39.813 –> 16:47.521
So, but the barrier to entry is a very interesting conversation because when people say, why can’t I get in the business?

16:47.601 –> 16:49.202
Well, one, it’s expensive.

16:49.242 –> 16:52.505
You can’t get two cousins for 50 grand to open the restaurant.

16:52.966 –> 16:54.067
Hotels are much more expensive.

16:54.403 –> 16:56.183
Number one, that’s just a barrier right there.

16:56.564 –> 16:58.464
But then you have to know the codes.

16:58.484 –> 17:01.865
You have to know, well, yes, this will work, but then you have to deal with this.

17:01.885 –> 17:09.327
Like if you’re, God forbid, you open one in New York City, you know you’re going to deal with the fire codes and the unions.

17:09.407 –> 17:11.928
And like, it’s just, that’s a high barrier to entry, right?

17:12.628 –> 17:23.731
So when you say barrier to entry, name the first three that gets you probably in the game faster than someone just starting in the game.

17:25.506 –> 17:28.608
Like why can you jump those barriers to entry faster than they can?

17:29.629 –> 17:30.130
Good question.

17:31.411 –> 17:31.711
Go ahead.

17:32.512 –> 17:46.883
Well, I would say like for us, like the dynamics of our team and the level of sophistication that we have, we all kind of offset each other’s skill sets that we can probably go into a market where we can be very successful.

17:47.463 –> 17:49.005
We have a great construction team.

17:49.905 –> 17:51.026
We have a finance guy.

17:51.086 –> 17:52.267
We have a deal guy.

17:52.327 –> 17:55.809
We have Bob in capital raising, investor relations side.

17:55.829 –> 18:00.592
We all kind of come together when we look at deals and we look at a particular hotel.

18:01.132 –> 18:11.179
We just know that there’s a lot of upside value in us acquiring this hotel because there’s a lot of different… We have relationships with maybe major corporations in the market.

18:11.539 –> 18:16.943
We have other hotels already in the market that will have a lot of efficiencies that we can put in.

18:17.751 –> 18:25.834
All those things we look at, and we also know the franchisees are not, there’s no new supply coming in the market because we know we have a relationship with the city, right?

18:25.954 –> 18:27.475
Or we’re government officials, right?

18:27.515 –> 18:39.160
So all those things we look into, we factor into like, what is it really gonna, how much value can we really bring above the baseline of what typical hotel ownership groups or management companies do, right?

18:39.760 –> 18:43.802
I think for us is that we look at all, holistically, all different factors of it.

18:43.842 –> 18:45.483
Like we bought a Hampton Inn in downtown Cleveland.

18:45.843 –> 18:46.083
Mm-hmm.

18:46.483 –> 19:12.471
nobody would have thought of it but we it’s an opportunity zone site i mean just think about that right that level and it requires a lot of you know uniqueness so we brought in good partners that we have to help us enable to like be successful in that opportunity zone process right just the value that we’re bringing into the building into the downtown market right so there’s a lot of different things that i i would say like that’s unique to us as a team yeah and you can’t you can’t do it area to entry

19:14.767 –> 19:22.393
Anthony, to add on what Amit just said is, you know, like we’re all into our 15th, 18th, 20th year of business.

19:22.793 –> 19:22.973
Right.

19:22.993 –> 19:28.077
Like we, you know, we physically started right early college years.

19:28.397 –> 19:31.879
So we’ve done it and we’ve been successful with other verticals.

19:31.979 –> 19:32.240
Right.

19:32.280 –> 19:37.904
You know, for our from our side on the Green Harvest side, we started with multi started with a motel.

19:38.544 –> 19:43.585
Graduated to multifamily apartments, really helped scale that side of the business.

19:44.146 –> 19:46.146
And then we moved on to hospitality.

19:46.566 –> 19:46.826
Right.

19:46.946 –> 20:00.330
And so having having formed capital in multiple verticals, having worked with attorneys, cities, government officials to understand what the community’s requirements are and adding value to that.

20:01.130 –> 20:04.234
Ahmed’s background is everything from renovations to constructions.

20:04.995 –> 20:10.040
And then we all got to a point where we’re like, OK, how can we complement each other’s skill sets?

20:10.801 –> 20:12.443
And how do we build a team?

20:12.583 –> 20:17.449
And I think if we had to give advice to somebody starting out, I think it would be in this manner.

20:18.450 –> 20:22.334
First, becoming a subject matter expert is probably the most important thing.

20:22.354 –> 20:23.094
And that takes time.

20:23.515 –> 20:24.756
It takes education and time.

20:25.136 –> 20:27.378
You must pick a lane and focus on it.

20:27.418 –> 20:34.865
If it’s elect service, if it’s motels, if it’s luxury, whatever it is that you have a keen interest in, follow that.

20:35.425 –> 20:46.015
Second, find individuals that you can align your, you know, your like-mindedness, your principles with, your intentions with, that have different skill sets than you, right?

20:46.435 –> 20:50.699
If you mirror the person that you’re going to partner with, it’s probably not a good partnership, right?

20:50.719 –> 20:54.422
If you have agreements on every decision you make, it’s probably not a good partnership.

20:54.482 –> 20:57.805
We adamantly disagree probably on every decision we make.

20:57.885 –> 20:59.567
We all think we can do it.

21:00.107 –> 21:06.229
But at the end of it, our common intention and purpose, we want to build a lasting business.

21:06.289 –> 21:07.190
We want to do it together.

21:07.230 –> 21:08.290
We want to do it the right way.

21:08.790 –> 21:12.712
And I think that’s what gives us a competitive edge.

21:13.032 –> 21:15.653
Anthony, you muted yourself and it looked like you muted yourself.

21:16.693 –> 21:19.494
Just an expert in the field is so critically important.

21:20.054 –> 21:24.256
I’ve seen so many what I’ve done over my career and then going into Hotel Impossible.

21:24.936 –> 21:28.077
I can’t tell you how many people that have owned Dunkin’ Donuts or owned

21:28.632 –> 21:32.353
you know, car washes or seven 11s or restaurants.

21:32.893 –> 21:33.994
And they’re like, they see a deal.

21:34.774 –> 21:36.254
Well, there was one deal that comes to mind.

21:36.314 –> 21:37.295
It was a $50 million deal.

21:37.315 –> 21:38.895
The guy lost the financing.

21:39.355 –> 21:43.917
It crumbled in, I think five years of sitting there and they picked it up for 2 million.

21:44.317 –> 21:48.098
Now every other hotelier in that area ran from it.

21:49.264 –> 21:57.491
Now, very sophisticated hoteliers because they knew that $2 million would cost them $35 million to get that thing open and running.

21:57.611 –> 22:03.836
And that area couldn’t afford a $35 million water park for a number of reasons.

22:04.056 –> 22:06.058
But somebody saw that and was like, oh, look at me.

22:06.078 –> 22:06.879
Look how lucky I am.

22:07.339 –> 22:10.322
You know, it’s like buying a Porsche and you don’t open the hood and there’s no engine in it.

22:10.342 –> 22:12.884
Well, nobody else does because there’s no engine, right?

22:12.904 –> 22:16.166
There’s no engine.

22:16.367 –> 22:17.948
And I think that that’s, you know,

22:18.917 –> 22:21.199
It’s having the knowledge.

22:21.279 –> 22:22.960
It’s like it comes second nature.

22:23.221 –> 22:24.362
I’m going to ask you a question.

22:24.622 –> 22:26.343
When you were talking, it popped in my mind.

22:27.124 –> 22:32.468
What is the quickest it took you to make a decision on buying a hotel?

22:32.588 –> 22:36.992
Meaning you see the hotel and you’re literally calling someone to transfer.

22:37.372 –> 22:39.134
I have my number.

22:39.294 –> 22:41.015
I want to know your number.

22:41.055 –> 22:41.856
What was the fastest way?

22:42.176 –> 22:43.416
So there’s five of us.

22:43.496 –> 22:44.797
For me, it’s 30 seconds.

22:45.157 –> 22:46.057
I see it.

22:46.097 –> 22:46.918
I’m like, I know it.

22:47.058 –> 22:47.858
It’s going to work out.

22:47.878 –> 22:49.618
We’re going to figure it out.

22:49.819 –> 22:52.459
Before you walk in or after you walk in, how many minutes do you feel?

22:52.659 –> 22:54.520
I mean, you can feel it, right?

22:54.980 –> 22:59.462
And our finance partner would tell you three to six months.

23:00.122 –> 23:01.162
Three to six months.

23:01.182 –> 23:03.483
No, but you’re literally saying transfer the money.

23:04.025 –> 23:16.168
Yeah, I, listen, I would, you know, again, this is why you have partners because like, again, not always is that a good approach, but, you know, usually, you know, when you look at an asset and you look at enough assets, right?

23:16.208 –> 23:24.231
We look at a certain age, 1998 to 2018, 100 to 150 hotel keys, Hilton product, Marriott products.

23:24.491 –> 23:28.832
You look at the market, you look at the demographics, per capita income, median household incomes.

23:29.112 –> 23:30.352
You look at demand drivers.

23:30.692 –> 23:31.993
You look at who the owner is.

23:33.047 –> 23:58.437
more often than not if it’s an institutional owner in the midwest and and we see that top line and we see like massive expense structures like multiple layers of expenses that we don’t even know how the heck they put in there we know that’s a winner because that that that that asset nobody is particularly asset focused they’re very much fund focused right right so it is one odd you know and you know the

23:59.117 –> 24:01.518
one out of 10 have fallen through the cracks, right?

24:01.598 –> 24:04.819
And so when we see it, we’re very much adamant to get it done.

24:04.859 –> 24:06.639
Now we have a very thorough process.

24:06.659 –> 24:12.361
Like it takes us anywhere from two months to a year to get a deal closed, right?

24:12.441 –> 24:17.023
So there’s a lot of due diligence that we go into it, but that initial feeling is there.

24:17.443 –> 24:21.644
Yeah, but it takes you how long to lock it up because you got to lock it up.

24:21.964 –> 24:23.144
So how long does it take you?

24:23.584 –> 24:25.025
I got to get that deal and you lock it up.

24:26.187 –> 24:27.188
It depends on the deal.

24:27.269 –> 24:35.700
I mean, you know, we sent a seven figure non-refundable wire to lock up a sub $10 million deal because it’s in our market.

24:35.760 –> 24:40.727
We knew what it was and we knew it was hard money, non-refundable, but we knew that we could get it done.

24:41.207 –> 24:46.050
I was in the room where somebody gave a $5 million check non-refundable in one breakfast.

24:46.191 –> 24:47.351
He didn’t even finish his eggs.

24:47.792 –> 24:49.493
And he goes, I know somebody else is looking at this.

24:49.853 –> 24:51.154
Here’s $5 million non-refundable.

24:51.174 –> 24:52.155
You know all the names involved.

24:52.195 –> 24:52.715
I gave you the names.

24:52.735 –> 24:54.576
You know exactly what I’m talking about.

24:54.596 –> 24:58.459
$5 million in cash, a ride to the airport, sealed the deal.

24:59.240 –> 25:03.323
And literally within minutes, I was in my office having to do due diligence.

25:04.023 –> 25:07.966
And in 24 hours, they didn’t transfer more money.

25:08.226 –> 25:09.147
The guy lost $5 million.

25:09.187 –> 25:09.287
Wow.

25:12.139 –> 25:13.781
That’s insane.

25:13.921 –> 25:18.466
Before we wrap up today, the Fed’s indicated that they’re going to be lowering interest rates throughout the year.

25:18.806 –> 25:24.732
How does that inform your immediate decision making and your plans throughout the year to acquire some assets?

25:25.031 –> 25:27.652
So I’ll take this first and then Amit can chime in.

25:28.092 –> 25:36.675
From our perspective, market conditions for 24 are very similar to 23, even though the Fed speak is that interest rates are eventually going to loosen.

25:37.415 –> 25:42.677
We’ve seen a few more lenders come to market, but again, the lending environment is very tight.

25:42.697 –> 25:45.138
So our underwriting has not changed.

25:45.198 –> 25:47.499
We still forecast very similar conditions to 23.

25:48.817 –> 26:04.550
We’re also in the early stages of forming our first actual fund, about $150 million fund to actually acquire hotels starting June of this year, all the way through July of next year, because we see the opportunity in the market that we saw in 23 continue into 25.

26:07.083 –> 26:07.764
Right.

26:07.824 –> 26:21.135
And basically a fund for people that don’t know, basically the money’s there and you look at a deal, you do your due diligence and you move the money and you can move quicker and you basically, you can get in and out quicker.

26:21.676 –> 26:25.980
So I remember the first, my first introduction to a fund was,

26:26.640 –> 26:48.519
um there’s a lot going on and there’s a and there’s a lot of pressure on that one because you don’t get you don’t get fun too if i want one that works out so well right again and you got to get that money deployed and i’m in the industry here about all this money sitting on the sidelines this is a great example of having this money and you’ve got to get it out to the market as quick as possible ahmed what’s your approach and thought about this

26:49.312 –> 27:02.418
Yeah, I think I go back to the relationships that we’ve built in 20 last year, and we go back to some of those folks, hotel groups, institution groups, management companies that do have solid deal flow that need to exit.

27:02.938 –> 27:11.362
And I think we would like to scoop up a lot of those opportunities that fit our profile again with this fund, right?

27:11.402 –> 27:15.004
And I think we see a very similar kind of picture, like Obavin said.

27:15.484 –> 27:17.625
But I think also on top of that, we’ve created a lot of,

27:17.905 –> 27:43.086
a lot more banking relationships last year right so that we would go back to our debt partners and really say look here’s our plan we’re going to do what we did last year but maybe even more right and so i think for us it’s it’s 90 percent focus on acquisitions and 10 10 15 maybe focus on you know development projects that we’ve been looking at too right that’s awesome so you you gentlemen gonna be at uh alice next week unfortunately you can’t we’ll be at hunter

27:43.934 –> 27:44.535
Okay, cool.

27:44.695 –> 27:47.497
Yeah, I’ll be at I’ll be at other meetings scheduled.

27:47.517 –> 27:50.559
So we’re, you know, we’re in other parts of the world right now.

27:50.599 –> 27:51.079
That’s all right.

27:51.099 –> 27:51.640
That’s all right.

27:51.700 –> 27:55.242
It’s a it’s a very productive but exhausting event.

27:55.723 –> 27:56.443
That’s for sure.

27:57.084 –> 28:01.227
We’ll be out there in LA next week doing some doing some coverage for sure.

28:01.347 –> 28:04.509
Any, any final words that you gentlemen have with us today?

28:04.569 –> 28:05.750
Amit, you want to start?

28:06.880 –> 28:17.045
No, I think for us, what we did last year was probably pretty impressive from the hospitality world because of where the debt markets were.

28:17.145 –> 28:20.167
There’s very few transactions that have happened, and we did quite a bit.

28:20.207 –> 28:22.408
I think momentum is there for us.

28:22.908 –> 28:25.430
We have a solid investor base that supports us.

28:26.230 –> 28:28.471
We have franchise relationships, banking relationships.

28:28.931 –> 28:33.734
We’ve created all these institutional fund relationships, and I think we’re really excited what’s coming in the near future for us.

28:34.076 –> 28:44.120
Hey, Bob, is it a more favorable environment for you when there’s less overall development and purchasing of properties or when everybody’s had it at once?

28:44.840 –> 28:51.303
Yeah, no, I mean, you know, it’s like Warren Buffett’s quote, you know, be greedy when others are fearful and be fearful when others are greedy, right?

28:51.423 –> 28:55.425
And I think for us, that really rings true right now.

28:55.485 –> 29:00.027
I think we’ve done a lot of, you know, work to be prepared for this moment.

29:00.107 –> 29:02.128
We hope to take advantage of it over the next 12 to 24 months.

29:05.495 –> 29:08.538
People who are nimble win in these environments.

29:08.558 –> 29:09.900
Hey, Anthony, we started saying it in 2021.

29:10.200 –> 29:14.184
The people that were making the deals then were going to be the heroes of the coming cycle.

29:14.424 –> 29:16.887
And we’re seeing all of that stuff come to bear.

29:17.187 –> 29:21.091
On a different, just on media, like we were the first ones up during COVID.

29:21.131 –> 29:22.413
We were the first ones up live.

29:23.228 –> 29:25.610
Literally 24 hours, we were up and we got everybody.

29:26.230 –> 29:29.272
If we went number two and number three, we would be chasing somebody else.

29:29.952 –> 29:31.713
So we were just like, yeah, let’s do it.

29:31.753 –> 29:31.994
Click.

29:32.014 –> 29:33.254
What are we going to talk about?

29:33.314 –> 29:33.615
I don’t know.

29:33.635 –> 29:34.455
What are we going to talk about?

29:34.575 –> 29:38.197
We literally said that on air.

29:38.237 –> 29:41.339
Sometimes you just jump when you know you need to jump and it works out.

29:42.040 –> 29:43.621
Thank you very much for having us, gentlemen.

29:43.921 –> 29:45.722
We’re very appreciative of this.

29:45.942 –> 29:46.783
No, thank you.

29:46.803 –> 29:51.526
We love your show and look forward to continuing to have conversations.

29:52.048 –> 29:56.590
Yeah, Bobbin, honestly, I’d love to have you guys back on like six, seven months from now.

29:56.630 –> 29:58.991
I’d love to hear how it’s going, get an update on the fund.

29:59.051 –> 30:03.133
I thought that this was really educational for us and for our audience.

30:03.173 –> 30:06.154
So Amit, Bobbin, thank you so much for being here, gentlemen.

30:06.354 –> 30:07.715
Really, really appreciate it.

30:08.015 –> 30:08.255
All right.

30:08.535 –> 30:11.277
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30:11.317 –> 30:15.099
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30:15.119 –> 30:17.620
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30:17.680 –> 30:19.381
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30:19.441 –> 30:21.202
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30:21.222 –> 30:24.064
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30:24.144 –> 30:27.586
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30:27.906 –> 30:29.066
Thanks so much for being here, guys.

30:29.086 –> 30:30.047
We’ll be back tomorrow.

30:30.067 –> 30:31.928
Remember, we’ve got one life, so blaze on.

30:32.048 –> 30:34.169
And be kind to yourself.

30:34.609 –> 30:35.710
Bye.

30:36.190 –> 30:36.490
Peace.

30:36.510 –> 30:37.591
All right, Bobby.