Raleigh Four Points

Fairway America Management Group IV LLC (“Fairway”) and Vivo Investments, LLC (“Vivo”) (“Co-Managers”) intend to acquire a 113-room suburban upscale hotel in Raleigh, North Carolina, currently operating as a Sheraton Four Points, and convert it to 113 apartment units.

Jointly, the Co-Managers have acquired more than 20 projects together as part of an opportunistic strategy to acquire functionally obsolete hotels at an attractive all-in cost basis in undersupplied markets, and then convert them into competitively priced apartment units. Once the conversion is complete, the Co-Managers intend to refinance or sell the Property.

• Compelling Basis: The Co-Managers believe they are acquiring this Property at an attractive going-in basis of $114K/unit. Additionally, with a 4.9% going-in yield on purchase price (on the trailing 12 hotel NOI through May 2022), there is an ability generate interim income prior to conversion.
• Attractive Unit Size & Amenity Package at a Discount:All 113 keys will be converted to 440 SF one bedroom units, which the Co-Managers believe will be in demand. The units will be serviced by a Class A amenity package, including a fitness center opening into a private courtyard with a BBQ, patio, pool area, tenant lounge, and more. The Co-Managers believe they can generate demand by offering rents at $1,175/unit/month, which is ~14% below identified studio comps, ~20% below identified 1-bed comps, and ~24% below average class A studio rents of $1,541 within a 5-mile radius of the Property.¹
• Execution Experience & Reduced Renovation Scope of Work: Having acquired over 20 assets together, the Co-Managers have ample experience executing on the strategy. The Co-Managers believe construction risk will be mitigated by this experience. In addition, the conversion has a reduced scope of work due to two factors:
• All units have existing wet bars to reduce plumbing construction risk, and
• The Property was renovated in 2016, bringing all amenities up to modern standards and significantly reducing anticipated deferred maintenance.
• Market Momentum: Raleigh has attracted significant institutional interest due to above average population growth, job growth in key sectors (anchored by the Research Triangle Park and top educational institutions NC State, Duke, and UNC Chapel Hill), and a higher-than-average quality of life, driven by a low cost of living and business friendly tax and political climates.² Over the previous 12-month period, there has been $4.4B of multifamily sales volume.³