DEBORAH BERKE & PARTNERS ARCHITECTS LLP220 Fifth AvenueNew York NY 10001phone 212 229 9211fax 212 989 3347www.dberke.com
Development, Design and Financing Strategies for Urban Revitalization Using Hospitality and the Arts21c Museum Hotel and Downtown Louisville
ULI
26 October 2011
LOUISVILLE:
Museum Hotel
Nineteenth Century
Warehouses
The Architectural Story
1979
1979
1995
08 October 2004
The 21c Financing and Financial Story
The 21c Financing and Financial Story
2001
Laura Lee Brown and Steve Wilson want to help revitalize Downtown Louisville by developing a project that exposes people more regularly and conveniently to contemporary art.
2001 – 2006
Most of Louisville thinks Steve and Laura Lee are crazy for trying to build a boutique hotel in Louisville focused on contemporary art.
2004
Banks wholeheartedly agree with this sentiment, but we still create a public / private financing partnership that permits 21c to become a reality.
2006
21c opens
Significant Occupancy Growth
Market Leading Rates (by a huge margin)
Expanding Lead Over Competition
Notes:1. RevPAR = Revenue Per Available Room2. RevPAR Index of 150 means that 21c’s RevPAR is 50% higher than that of its Competitive Set of local hotels. Or, in other words, 21c is generating 50% more money per room, per night than its competition.
2011 YTD Through September
Smith Travel Research, Inc.
2010 Survey Dataguest satisfaction
21c Museum Hotel 2011 YTD: 95.35
awards
cincinnati
- construction started May 2011- opens October 2012- 156 rooms- $50 million (significant local, state & federal incentives)
bentonville
- site work has started- opens January 2013- 103 rooms- $30 million
The financing challenges of the early 2000s are very similar
to the challenges today
Challenges of Financing Projects Today
Bank loans for new construction are extremely difficult to find - Personal guarantees and other collateral are almost a given - Many banks won’t even consider a hotel loan for ambiguous regulatory or industry reasons
City and state governments want to help, but have tight budgets
Federal Government programs: - Are at constant risk of extinction - Have enormous transaction closing costs - Are less valuable today
These challenges will likely remain for the foreseeable future (the ‘new normal’)
Category of Incentive 21c Louisville (closed December 2004)
21c Cincinnati (closed October 2011)
City Grant for Museum $1,700,000 $2,500,000
City Property Tax TIF $3,800,000
State Sales Tax Refund $3,000,000
Federal Historic and New Markets Tax Credits $6,800,000 $11,600,000
State Historic Tax Credits $1,000,000 $6,000,000
Bank Loan(s) $11,000,000 $20,000,000
Subordinated Loan $6,000,000
Owner Equity
Overview of Financing Structure
Cincinnati Financing
Opportunities Today
Favorable construction pricing - New construction vs. rehabilitation
Hotel market is picking back up
Very few other new projects
Competition may have neglected upkeep
Public sector looking to help jump start construction projects - Full-service hotels create many new jobs
Public sector likes unique and new - Unfortunately, financiers like ‘the familiar’ - Line up public incentives first
At the end of the day, it’s all about people…Excitement, hard work, creativity, and a solid plan are the foundations for success
Architectural RecordCondé Nast TravelerDetailsEsquireFood & WineGarden DesignInterior WorldMetropolitan HomeNational GeographicThe New York TimesTravel + LeisureUSA TodayVanity FairThe Wall Street JournalWallpaper*