Argosy invests in Homewood Suites Aliso Viejo
On August 15, 2014, Argosy Real Estate made a controlling investment in the land acquisition and development of a 129-room Homewood Suites hotel located in Aliso Viejo, California (Orange County MSA). The 4-story hotel will be located on 2.6 acres within a mixed-use community located less than one mile from the SR-73 toll road, providing excellent access throughout Orange County. The land was purchased directly from the master developer at a favorable cost basis, with all entitlements and construction permits in place at closing. The budgeted all-in cost basis represents a significant discount to comparable sales in the area. The Project is intended to capture pent-up demand for extended stay room nights through aligning with a premium brand that does not have an existing presence in the submarket.
The Project is located in a strong submarket with numerous corporate and leisure demand drivers and high barriers to entry for new hotel development. Nearby demand generators include a large amount of office space, including many corporate headquarters. The Orange County hotel market is significantly underdeveloped relative to demand, due to barriers to new supply including a lack of developable land and an extremely lengthy California entitlement process. The City of Aliso Viejo is more than 95% built out. There is also a lack of existing or proposed extended stay product in the submarket, with the nearest competitive extended stay hotel located over 9 miles from the subject site.
Homewood Suites is a premium extended stay flag within the Hilton brand family. Hilton Worldwide is a global leader in the hospitality industry, with approximately 3,900 hotels in 91 countries encompassing brands in every hospitality segment. The hotel will largely follow Hilton prototype design and will include an outdoor pool, bar/breakfast area, meeting space, and a fitness center. The hotel is expected to benefit from Hilton’s strong distribution system and guest loyalty program.
Argosy partnered with Stonebridge Companies, a privately owned, vertically-integrated hotel development and management company based near Denver, Colorado. Stonebridge has extensive experience in all aspects of hotel development and operations. Stonebridge currently operates approximately 50 hotels comprising 7,500 guest rooms in 9 states, including 8 hotels in California, 7 of which are in Southern California. Their portfolio includes premium-branded hotels within the Hilton, Marriott, Starwood, and Intercontinental affiliations.