Argosy Exits Durham Four Points

Argosy has exited its investment in the Sheraton Four Points Hotel located in Durham, North Carolina. On September 19, 2013, the hotel was sold to a regional hotel owner/operator. The property includes a 6-story, 98-room hotel that was constructed in 2005. The 2.0-acre site is located at an exit of I-40, a major east/west interstate highway, and is adjacent to the Southpoint Mall, a 1.3 million square foot super-regional mall.

On December 13, 2012, Argosy made a controlling equity investment in a partnership formed to purchase two select-service hotels in Durham: the Four Points, and a Homewood Suites located 5 miles southeast of the Four Points. The Homewood Suites remains as an operating asset in the Fund. Argosy formed the partnership with Peachtree Hotel Group (“Peachtree”). Peachtree is the operating partner and was Argosy’s partner on the Days Inn Atlanta investment which was successfully exited in July 2012. Peachtree is a vertically-integrated hotel owner, manager, and developer based in Atlanta with properties located throughout the Southeast.

The Four Points was acquired through the purchase of a distressed mortgage note and an SBA note that were both secured by the property. The notes were acquired at a discount to the outstanding principal balances, resulting in an acquisition basis at a significant discount to replacement cost and comparable sales. The partnership foreclosed on the asset and took title to the property on March 4, 2013.

In conjunction with the acquisition, Peachtree took control of the hotel’s management and stabilized the property while various business plan alternatives were considered, including an immediate sale of the asset, a modest renovation with improved management, or a full repositioning and rebranding of the hotel. The partnership concluded that the purchase offer from the Buyer represented the most attractive risk-adjusted return for the partnership’s investment in the Four Points.