Newly launched Winston Hotels looks for ‘complex’ projects

RALEIGH, NC—With more than 80 years of hotel development, acquisition and management experience behind them, three executives have launched Winston Hotels LLC to develop and acquire hotels across the U.S.

“We saw an opportunity to combine the experience and track record of seasoned industry professionals with significant successful development, acquisition and renovation experience, coupled with the relationships and balance sheet to build a unique portfolio of premium-branded, select-service and compact full-service hotels,” said Mathew A. Jalazo, EVP of development with the company.

“Our research suggests that the next four years still show strong industry fundamentals. Regardless, we believe it is important to develop and invest throughout all cycles. At any point in a given cycle, there are different opportunities for investment and development. We can adjust our focus and strategy accordingly, as market dynamics shift to capitalize on the opportunities as they present themselves.”

Robert W. Winston III, executive chairman of the board/co-founder, has been involved in hotel real estate for more than 27 years, most recently as CEO of Winston Hospitality, a hotel operator founded in 1991. He is the former co-founder/CEO of the original Winston Hotels Inc., a publicly traded hospitality REIT that ranked in the top quartile of public hospitality REITs for shareholder investment returns before being acquired in 2007. He is also CEO/owner of Winston Hospitality.

Joseph V. Green, CEO/co-founder, has nearly 40 years of experience. He co-founded and was president of the original Winston Hotels Inc., and most recently served as president of The Preiss Company (TPCO), one of the largest privately held student housing owner-operators with roughly $1.5 billion of assets under management.

Jalazo has been in the industry for 15 years, most recently serving as VP of development for Urgo Hotels & Resorts, where he helped grow the company’s portfolio from 18 to 44 hotels.

“The executive team’s long-standing relationships with premium brands, brokers, lenders and consultants, among others, have led to a significant initial pipeline of opportunities and will allow us to continue to build that momentum,” he said. “Moreover, we enjoy a unique reputation for success with challenging, complex development projects in addition to converting, rehabilitating and repositioning projects that enables us to differentiate ourselves from most in the industry.”

While the company is only in its launch phase, it has already put together a pipeline of three to five value-add renovation/redevelopment acquisitions and development projects with a total capitalization of $150 million to $200 million. “Part of our strategy is to be flexible and opportunistic,” said Jalazo. “Winston Hotels will concentrate on both acquisitions and development, including medium to heavy value-add repositioning, adaptive-reuse of existing buildings and ground-up development opportunities, all in appropriate markets across the U.S. and Canada.”

The company will pay specific attention to target markets with signs of developing growth trends. “Development efforts initially will focus on the eastern half of the U.S., but we will consider select opportunities elsewhere as they arise,” he said.

According to Green, the company has a long-term outlook with “patient capital to develop through all phases of the investment cycle.” As part of this broader outlook, questions the company will ask itself as it evaluates opportunities include whether the market has the long-term ability to absorb supply growth, and whether each individual market has recovered following the Great Recession. “As a result, we will be in a limited group of developers who match our profile and experience, which we believe gives us a significant competitive advantage in all phases of the real estate cycle,” he said.

According to Winston, the executives see a good amount of investment opportunities for hotel properties with the right dynamics in the near future. Acknowledging that many markets—such as top MSAs—are at capacity, he said that the company’s focus will be on deals that offer above-average returns.

The “right dynamics,” according to Jalazo, are driven in large part by the market and location of the property. “We look for markets, primary and/or secondary, that have strong and/or future fundamentals that would provide the foundation for us to achieve our risk-adjusted return profile. We like complex transactions with the right location, market and brand, where we can add substantial value through our team’s experience. We also have the ability to analyze and act on a large volume of transactions and isolate more difficult cases that may have been passed on by others.”

The company will also target premium brands, including select-service and compact full-service hotels within the Marriott, Hilton, Hyatt and IHG brand families. “The premium brands in the select-service and compact full-service segments are less volatile than other segments and tend to perform relatively well through all cycles,” he said. “Furthermore, these segments and brands permit more efficient operations that improve bottom-line performance and result in high-end guest experiences that tend to drive occupancy and ADR.”

All of the hotels in the Winston portfolio will be managed by Winston Hospitality. “While we are affiliated with Winston Hospitality from a hotel management perspective, our business is to develop and acquire value-add opportunities,” said Jalazo. “Winston Hotels will concentrate on premium locations in some major markets, resort locations and emerging markets with indications for future prolonged growth. We will target major and secondary markets that demonstrate signs of new and existing long-term economic growth, including public/private investment, employment growth and local government that attracts new business and provides incentives and tax credits.” HB

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