Last Call To Invest In Private Equity Offering For Sonoma County Boutique Hotel

The private equity real estate investment platform CrowdStreet’s most recent hospitality real estate offering is approaching the final due date for offers.

The offering is for an equity investment in the Sandman Santa Rosa Hotel in Santa Rosa, CA. The 135-key independent hotel is situated on 2.79 acres and serves as an ideal launchpad for visitors exploring Sonoma’s renowned wine country region.

Offers to invest are due by April 8, 2022 with funds due by April 13, 2022.

Investment Highlights: The offering is being sponsored by Yang Capital, a boutique real estate investor that has owned the property since 2015. The sponsor is raising up to $7,995,000 to recapitalize the hotel at a discount of roughly 15% to 20% to its current value.

The proceeds of the offering will be used to pay off existing mezzanine debt and to implement a $3 million renovation that includes renovations to interior units, exterior enhancements and common area improvements.

• Minimum investment: $25,000
• Target investor IRR: 17%
• Target equity multiple: 2.1x
• Target average cash yield: 9.4%
• Target investment term: 5 years

Benzinga’s Take: The assumptions made when underwriting this deal appear to be fair conservative. The sponsor is assuming an average occupancy rate of 67.1% after renovations, even though the company has averaged 67% occupancy over the past three years.

The property also has little debt at a 43% leverage-to-cost and a high average debt service coverage ratio (DSCR) of 4.45. This could mean significant downside protection for investors, along with the potential to outperform the target returns.

Find more information on this offering and other private equity real estate investments through Benzinga’s Alternative Investments.

Photo: Courtesy of CrowdStreet