

Conor Acquisitions, LLC
Headquartered in Fort Myers, Florida, Conor Acquisitions is a real estate investment company primarily focused on income producing real estate within the hospitality industry. Conor concentrates on all facets of the hotel industry, including acquisition, development, construction, renovation, asset management and property analysis. Its experience ranges from urban high-rise branded hotels to boutique properties. It has worked with many hotel brands within the industry, including Hilton, Marriott, IHG, Starwood, Hyatt, Choice, Wyndham, and Best Western. Since inception, it has completed $63 million in hospitality-related transactions.
Conor Acquisitions aims for growth through vision, integrity, and values. It is dedicated to ensuring that its hotels exceed the expectations of their guests, employees, investors, and their partners within the community. It persistently strives to achieve superior value, provide exceptional guest service, maintain an environmentally-conscious operation and utilize advanced technologies. It is Conor's objective to increase operating efficiencies and create value-added improvements that translate to its guests. Conor has a conservative approach to maximize ROI using its seasoned knowledge from the hospitality industry.
Investment Approach
Conor Acquisitions is a motivated, growth-oriented company. The following represent target investments for Conor:
- Franchised Hotels: Marriott, Hilton, Hyatt, Starwood, IHG, Choice, Best Western, Wyndham
- Full, Select, Limited Service and Extended Stay Hotels
- Purchase price points targeted at discounts to replacement costs
- Value creation opportunities: Legal strategies and repositioning
The strategy employed on these target investments varies by which of the three categories below best applies:
Core Investments: Conor targets properties across a plethora of markets with attractive valuations, providing above average, sustainable yields and favorable long-term prospects, based on a variety of demand generators.
Value-Added Investments: Conor pursues opportunities where it can leverage their industry knowledge, relationships, and reputation to create and add value. It aims to acquire properties with upside potential, and utilize strategies such as repositioning, conversion, or redevelopment.
Opportunistic Investments: Conor welcomes opportunities where capital constraints, or the markets at large prevent an operating partner from leveraging the full potential of an asset. It explores opportunities including diversification by investing in different areas of the capital stack.
Track Record
At A Glance
Investment Strategy: | Buy and Hold |
Hold Period: | 5 years |
Total Project Budget: | $9,898,980 ($103,114 per room) |
Acquisition Price: | $8,120,000 ($84,583 per room) |
Property Type: | Hospitality |
Number of Rooms: | 96 rooms |
Distributions to Realty Mogul 32, LLC: | 9% IRR Hurdle 60/40 split thereafter |
Projected IRR: | 18.1% - 19.9% |
Projected Avg Cash on Cash: | 14.3% - 14.9% |
Projected Equity Multiple: | 2.03x - 2.17x |
Projected First Distribution: | November 2015 |
Distribution Schedule: | Quarterly |
Investor Funding Deadline: | June 18, 2015 |
Estimated Closing Date: | July 29, 2015 |
Investment Details
Conor Acquisitions (the "Sponsor") plans to acquire the Property, a 96-room select-service hotel located 20 miles southeast of Memphis along I-240 next to the East Lenox Corporate Park.
The Seller acquired the Property a couple of years ago and then fully renovated it according to Courtyard by Marriott's current brand specifications before deciding to sell the Property to free up capital for other hotel acquisitions. Upon completion of these renovations in May 2014, the Property experienced 63% year-over-year growth in running 12 month revenue per available room ("RevPAR") through April 2015, and an increase in RevPAR penetration from 79% to 120%.
Although these recent improvements in performance at the Property have been material, the Sponsor believes there is additional upside yet to be realized. The Sponsor will work with the management company, Hotel Equities, on implementing a strategy to further increase revenues and reduce expenses, while also overseeing the change of ownership Property Improvement Plan ("PIP") mandated by Marriott. The Property is currently encumbered by a corporate group contract that guarantees approximately 50% of available room nights at a below market rate. Due to the non-traditional work hours of this corporate client, the Property must also provide additional services resulting in expense levels above those typically found in select-service hotels operating to support the demands of more traditional corporate clientele. Given the Property has never employed a Director of Sales ("DOS"), with the majority of business being generated by the national Marriott Reservation System, the Sponsor plans on implementing a revenue strategy that will include hiring a DOS to focus on the local market, along with taking better advantage of Marriott's Request for Proposal ("RFP") strategy from a national level to build a stronger Locally Negotiated Rate ("LNR") program while increasing leisure business and improving the Property's overall guest segmentation mix.
This transaction represents a unique opportunity to invest in a branded hotel that is being acquired with in place cash flow at a price per room below comparable sales. Meaningful improvements in performance have already been realized over the past 12 months as a more comprehensive PIP entailing extensive renovations was completed in May 2014. As a result this purchase will only trigger a modest change of ownership PIP, mitigating the construction risk often found in hotel transactions with comparable upside potential.
The Sponsor will handle all aspects of the investment including purchasing the Property, overseeing the Property Improvement Plan ("PIP") required by Marriott, and selling the Property. With respect to this PIP, the Sponsor has budgeted $480,875, or $5,009 per room. The Sponsor intends to employ a related party in Alpha Construction to supervise the renovations, along with a third party hotel management firm in Hotel Equities to oversee hotel operations. Hotel Equities is currently managing the Property for the existing owner, along with over 50 other hotels nationwide and most of the Sponsor's hotel assets.
The Sponsor intends to hold the Property for five (5) years before exiting the investment, though the hold period could be longer or shorter as it will largely be dictated by execution of the business plan. RealtyMogul.com investors have the opportunity to participate as equity stakeholders and earn a share of the cash flow and asset appreciation. RealtyMogul.com investors will invest in Realty Mogul 32, LLC. Realty Mogul 32, LLC will invest with Conor Capital Memphis, LLC, which will control Om Capital Memphis, LLC, the entity that will hold title to the Property. Investors can expect to receive quarterly updates and distributions, with the first distribution expected in November 2015 and continuing on a quarterly basis thereafter.
Investment Highlights
- Experienced Sponsor, Hotel Management and Construction Teams
- Centrally Located Along the Route 385 Business Corridor Among Numerous Demand Drivers
- Favorable Basis Below Recent Comparable Sales in the Market
- Brand Leader Currently Outperforming Competitive Set With Further Upside Potential
Risk Factors*
- Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated,” “projected”, “forecasted”, “estimated”, “prospective”, “believes,” “expects,” ”plans” “future” “intends,”, “should,” “can”, “could”, “might”, “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.
- Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 32, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
- Risk of Achieving Forecasted RevPAR Growth and Expense Reductions: While the Property's business operations appear to have room for improvement, there can be no assurance that the Sponsor will be able to effect the necessary improvements and operating efficiencies in line with those reflected in the Sponsor’s projections.
- New Development: There is risk associated with potential new development and the impact it would have on the Property's business operations.
- Uncertainty Surrounding Future Sales Price: There is risk associated with the Sponsor being unable to sell the Property as projected.
- Rising Interest Rates: The Federal Reserve has methodically reduced the amount of stimulus it was earlier injecting into the U.S. economy, and has signaled that increases in the federal funds rate may be forthcoming. This could potentially lead to rising interest rates offered by other lenders and could have an effect on the future value of the property (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).
- Mortgage Risk and Prepayment Penalty: The Sponsor has entered into discussions with a prospective lender for the Property, but there can be no assurance that the lender will complete financing on the rates and terms including in the underwriting being presented in the model for this investment opportunity. Should the terms of the debt financing change materially, investors will be notified. If the debt financing does not occur as anticipated and the sponsor needs an extension on the purchase contract, the seller of the Property may not so extend and the transaction may be cancelled. The Sponsor expects that any loan used to acquire the Property will be subject to some sort of prepayment penalty; a shorter than expected hold period would increase the risk of a prepayment penalty being assessed.
- Management Risk: Investors will be relying solely on the manager of Conor Capital Memphis, LLC for the execution of its business plan. That manager in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of Conor Capital Memphis, LLC (including Realty Mogul 32, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the manager of Conor Capital Memphis, LLC has significant operating experience, Conor Capital Memphis, LLC was recently formed and has no significant operating history or record of performance.
- Manager of Realty Mogul 32, LLC Will Participate in Sponsor's Promote Interest: The manager of Realty Mogul 32, LLC (or one of its affiliates) will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 32, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest. Realty Mogul 32, LLC itself is pursuing a venture capital strategy through investments in operating companies that manage and develop real estate; under this strategy, the manager of Realty Mogul 32, LLC is expected to be treated as an investment adviser exempt from federal or state registration.
- Uncertain Distributions: The manager of Conor Capital Memphis, LLC cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 32, LLC) from either net cash from operations or proceeds from the sale of the asset. That manager, in its discretion, may retain any portion of such funds for property operations or capital improvements.
- Risk of Interest Charges or Dilution for Capital Calls: The amount of capital that may be required by Conor Capital Memphis, LLC from Realty Mogul 32, LLC is unknown, and although Conor Capital Memphis, LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of additional capital. Realty Mogul 32, LLC does not intend to participate in a capital call if one is requested by Conor Capital Memphis, LLC and in such event the Manager of Conor Capital Memphis, LLC may accept additional contributions from other members of Conor Capital Memphis, LLC. Amounts that the manager of Conor Capital Memphis, LLC advances on behalf of Realty Mogul 32, LLC will be deemed to be a manager loan at an interest rate of 10%. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 32, LLC's interest in Conor Capital Memphis, LLC will suffer a proportionate amount of dilution.
- General Economic and Market Risks: While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, there can be no assurance that investor sentiment will be favorable, or that purchase financing to a buyer will be readily available, when the Sponsor attempts to sell the Property. The real estate market is affected by many factors, such as general economic conditions, supply and demand for real estate investments, interest rates, the availability of financing, and other factors, all of which are beyond the control of both RealtyMogul.com and Conor Capital Memphis, LLC.
*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
Address: | 3076 Kirby Pkwy, Memphis, TN 38115 |
Year Built: | 1998 |
Property Type: | Hospitality |
Number of Rooms: | 96 rooms |
Major Amenities: | On-Site Bistro & Bar On-Site Convenience Store Outdoor Pool Fitness Center Business Center Meeting Room Laundry Service |
The Property is located 20 miles southeast of Memphis along I-240, otherwise known as the Route 385 Business Corridor, next to the 72 acre, 7 building East Lenox Corporate Park. Situated on Kirby Rd (31,000 CPD) just south of the I-240 junction (105,000 CPD), the Property is centrally located amongst numerous demand drivers with St. Francis Hospital and the International Paper Headquarters to the northwest, the FedEx Corporate Headquarters to the Southeast and the BNSF - Memphis Intermodal Facility along the railway to the southwest.
Demand at the Property is generated primarily from corporate clientele typically resulting in higher occupancy levels during the weekdays.
Memphis General Overview
The market information below is from the Greater Memphis Chamber website: http://www.memphischamber.com/Community/Live/About-Memphis.aspx and the Infoplease website: http://www.infoplease.com/ipa/A0108552.html.
Memphis is located in the southwest corner of Tennessee within Shelby County, the core county of the Memphis metropolitan statistical area. Covering 330 square miles along the Mississippi and Wolf rivers, Memphis is the largest city in Tennessee and the 20th largest city in America. Memphis was founded on May 22, 1819, by investors General Andrew Jackson (who would later become the seventh President of the United States), General James Winchester, and Judge John Overton. Memphis was named after the ancient capital of Egypt on the Nile River.
Memphis is known as “America's Distribution Center,” because of the city’s central location serving the northeast, southeast, and southwest regions of the country. The city is the third largest rail center in the nation, has one of the country's largest inland ports and is the national headquarters for the Fed Ex air-courier company. Health care and related activities such as medical education and biomedical research are Memphis's largest industries, bringing over $5 billion a year to the local economy.
Many of the city's tourist attractions are associated with its prominent place in the history of American music, such as Beale Street and Graceland, Elvis Presley's home.
Memphis Economic Overview
The market information below is from the CoStar Portfolio Strategy, Memphis Hotel Market Fundamentals - 2015Q1 report.
With roughly 616,000 non-agricultural employees in the metro, Memphis employment is nearly 4% below 2007Q4 peak levels, still trailing the nation at large but showing improvement over recent years. Accounting for over 27% of all jobs, logistics and distribution-related sectors, the lifeblood of the Memphis economy, are not growing fast enough to provide a lift to overall employment. However, as of 2015Q1, growth in payrolls within the trade, transportation, and utilities sector finally eclipsed U.S. benchmark growth. Recent studies have shown that the Memphis International Airport alone injects nearly $30 billion a year into the region's economy. As a result, city and county officials continue to fine-tune a Regional Economic Development Plan that embraces core industries while positioning those industries to be competitive in a global knowledge-based economy.
Elvis may have been the King of Rock and Roll, but Memphis reigns supreme when it comes to logistics. Thanks to FedEx, Memphis International Airport is the second-busiest cargo airport in the world, only slightly behind the Hong Kong airport. The metro also has an extensive rail network served by five Class I railroads (BNSF, CSX, Union Pacific, Norfolk Southern, and Canadian National) and offers access to I-55 and I-40, one of the busiest trucking corridors in the nation, which will also include the additions of I-22 and I-69 once construction is completed. In addition, the Port of Memphis is the fourth-largest inland port in the U.S. That the utilities and transportation sector has offered robust employment prospects and is one of the metro’s primary demand drivers is understandable. The industry is far more concentrated in Memphis than in any other major U.S. metro, directly employing more than 10% of the workforce. This transport hub status not only benefits the warehouse market but also apartment demand, as the sector’s blue-collar demographic is statistically more inclined toward rentals.