Each year I like to take time to reflect on the prior year and the metrics surrounding our investment portfolio.
Even in the midst of the fed making aggressive moves to curb inflation, we were able to set a few records by acquiring 37 assets, raising ~$287mil in equity (all non-institutional), and distributing out $96mil+ to our investors.
In addition, we were able to add an additional $661mil to our assets under management.
In 2022, we made several strategic decisions with the growth of our portfolio. Many of you had expressed interest in expanding and diversifying your real estate portfolio outside of just multifamily and self-storage.
We made the decision to build out our acquisitions team to seek hotel and express car washes. In 2022, we were only able to acquire one hotel asset, but we certainly found a winner.
Acquired the Holiday Inn Express on Hilton Head Island
We acquired the only IHG-branded hotel on Hilton Head Island called the Holiday Inn Express for $25mil. We are spending $3.5mil to renovate the existing 153 rooms, upgrade the amenity set, and relocate the lobby to be directly connected to the main hotel instead of being disjointed.
When we originally underwrote this offering, we planned to spend the full $3.5mil on renovations. Our conservative projection was that IHG would kick in approximately $400k to assist in this property improvement plan (PIP) and that was the number we underwrote.
Being the only IHG-branded hotel on the island, they did not want to risk losing the IHG flag so they decided to kick in $1.7mil to assist us in paying for the $3.5mil PIP. This was a strategic move on their part to ensure they maintained the IHG-flag on the island.
IHG has 10mil+ members and being the only IHG hotel on the island is extremely valuable for our continued success.
We did not underwrite for this additional $1.2mil in renovation reimbursement so this is an added bonus for those investors in this offering.
In 2023 we plan to continue our efforts in analyzing hotel assets to add to our portfolio. We have been very selective which is why we were not able to find another asset that met our conservative underwriting criteria.
Expanded our Hurricane Express Car Wash Brand to 20 Locations
We had been exploring the car wash asset class for 18 months prior to making a final decision to start adding express car washes to our growing, diversified portfolio.
In 2022, we acquired 20 express car wash locations for ~$118mil (inclusive of our 2 new development sites). We launched our national car wash brand, Hurricane Express Wash (HEW). Our HEW brand is managed by our in-house property management company, HRA Management (HRA). HRA now has 150+ number of team members supporting all of our HEW locations.
We washed just under one million cars through our various HEW locations.
Self-Storage and Multifamily Growth
Our self-storage portfolio also grew by adding ~$67mil in assets and adding an additional 461,000 net rentable square feet under our management.
We added an additional 1,218 doors to our multifamily portfolio valued at $431mil. Our multifamily holdings alone are valued at $1.1B+ now.
Full Cycle Performance from Sold Assets
In addition to our portfolio growth, we were able to sell a couple of assets providing an average annualized return of 30.18% and internal rate of return of 27.92% to our investors in these full cycle offerings.
Plans for Adding Additional Asset Classes in 2023
As we enter 2023, we do not have any plans to add any additional asset classes to our portfolio. We do not think that it is wise to add any additional asset classes to our portfolio in 2023 due to the uncertainty in the market. Most economists are projecting a recession in the first half of 2023 with over 50% of the developed countries around the world also experiencing a recessionary environment.
Even though it is not a new asset class, we do plan to move into the multifamily new development space. We have recently hired on a full-time development person with many years of experience in the multifamily development space. He will be heading up our efforts to acquire greenfield land sites to build multifamily sites from the ground up. He will also be seeking greenfield sites for self-storage, hotels, and express car washes.
We are excited about this opportunity in new development for our portfolio and will be sharing more information in the coming months in this newsletter so stay tuned.
