GrowAbility Equity Hotel Fund: Q4 2023 Update

by | Jan 29, 2024 | GAE Hotel Fund Blogs & Articles

Hello Investors,

Below is the year-end financial recap for these newly acquired hotels in Radcliff, KY (Fort Knox) in the GrowAbility Equity Hotel Fund.

Candlewood Suites – Radcliff, KY

The Candlewood Suites property completed its required Property Improvement Plan (PIP) during 2023. With a total budget of $2.5 Million, the renovation included upgrades to the exterior signage, interior common areas, paint, and unit interiors. All of these upgrades were completed prior the closing on this property. These upgrades created a short-term negative impact on revenue for the year as units were taken offline. Even so, the property ended 2023 with T12 Net Income of $623,221.

Revenue for the quarter was slightly below budget due to a decrease in negotiated and project business (relates to hotel stay contracts with companies in the area). The hotel grew average room rates called Average Daily Rate (ADR) by $27.33 over the year prior, but lower occupancy over the year had a negative effect on Revenue per Available Room (RevPAR which is Total Revenue divided by Total Available Rooms).

During this same time last year, the market saw a significant bump from SMS Group and Lexicon (these are two local corporate groups that have regular business with both Candlewood Suites and our Fund’s nearby Holiday Inn Express). Those projects are no longer in the market. The nearby Elizabethtown market is still seeing positive growth, as they have a significant Ford Project in that area.

Government business from Fort Knox has slightly diminished in the near term. Due to some situations overseas, some of the trainings that typically take place have been postponed for later in the year. Our operating partner GoodEgg is seeing an increase in government inquiries, along with extended stay bookings, and are therefore projecting a ramp up in revenue during Q1 2024.

The Gross Operating Profit (GOP) for Q4 2023 was $203,063. Full year 2023 GOP was $1,498,972. There were no significant capital items in Q4. The hotel has maintained compliance with the Lender and is in good standing with the Franchisor.

Holiday Inn Express – Radcliff, KY

Q4 revenue numbers were slightly below budget. Even so, the property ended 2023 with T12 Net Income of $640,807. The Holiday Inn Express was affected by the same reduction from SMS Group and Lexicon. Similar to the Candlewood Suites, the Holiday Inn Express saw an increase in ADR of $22.46 over the year prior. Quarterly revenues were impacted by a short-term decrease in transient negotiated and transient discount. (Transient refers to short-term hotel guests. Usually folks stay 1-3 nights. These are often tied to discounts from platforms like hotels.com).

In addition, there was a reduction in government room nights. The market continues to see a robust amount of business from Ford. An increase in occupancy is projected for Q1 2024 from a surge in government work coming to the local market.

The GOP for Q4 2023 was $130,990. Full year 2023 GOP was $1,319,838. There were no significant capital items in Q4. The hotel has maintained compliance with the Lender and is in good standing with the Franchisor.

Distributions

Anticipating cashflow continues at sufficient levels through March, we plan to initiate Q1 2024 target distributions by the end of April 2024.

Financials

Financials through December 2023 (T12 Income Statements) for both hotel properties can be accessed here.

As always, please reach out to our team directly at investorrelations@growabilityequity.com or call us at (954) 716-7940 for any questions.

Until next time, keep growing your ability to accelerate your wealth!

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