Quanah CEO Gary Webb tells GlobeSt.com the program marks the entry of long-established parent company Quanah Partners LP into the hotel segment of the real estate industry. He says Quanah settled on the Value Place brand because of the success of its existing products. "Occupancies typically stay somewhere around 85% to 90%, which is phenomenally high for the industry," Webb remarks. "The typical return to investors generally ranges from 12% to 14%. It's a great investment."
Value Place, which has 55 properties in operation and several dozen in development, caters primarily to business travelers and people in the process of relocation. Units rent from about $200 to $350 per week. According to Webb, the chain has sold more than 600 franchises in three years. He says properties have either 105 or 121 keys and cost from $5.5 million to $8.5 million to develop, depending on the market.
Quanah obtained franchise rights for 10 separate markets, including Dallas, Tarrant and Rockwall counties in Texas; Albuquerque to Santa Fe, NM; Jacksonville, FL; and San Diego, Riverside, San Bernardino, Santa Barbara and Ventura counties in California. He reports the company has two Value Place properties already open in Albuquerque and Fort Worth. Three more sites are scheduled to open in the next two weeks in the Texas communities of Forest Hill, Rockwall and Trophy Club. A sixth will open in Jacksonville at the end of October.
Additionally, Quanah has projects under contract and design development in Fort Worth, Dallas, Benbrook, Irving and Mesquite, TX; Albuquerque; Jacksonville; and Palm Springs, Moreno Valley, Loma Linda, Victorville, Perris and Wildomar, CA.
Webb says the Value Place program is likely to demand virtually all of the parent company's resources for the next several years. "It's an aggressive development plan, and we're pretty much focused exclusively on the hotels. Especially since it's a new arena for us, we won't have time and energy for other development," he states.
Financing was provided by NorthStar Realty Finance Corp., a publicly traded REIT based in New York City. According to Webb, NorthStar provided $90 million in mezzanine and senior financing, while Quanah provided $10 million in equity. Announcements for capitalization for second and third phases of development and acquisition are expected shortly.
"The growth potential of the Value Place brand is stunning," says Webb. "It is the perfect storm - a concept that fills a real need, high customer satisfaction and strong internal financials."
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