Target Information

Civitas Capital Group and Atlantic Hotels Group have successfully secured construction financing for a new dual-branded hotel development consisting of 256 rooms, featuring both AC by Marriott and Residence Inn by Marriott. This project is strategically located adjacent to The Galleria Dallas, a prominent 1.8-million-square-foot regional mall, and within one mile of 11.5 million square feet of office space in Dallas, Texas. Anticipated to open in spring 2018, this hotel will serve as a cornerstone of the Dallas Midtown Redevelopment Plan, a substantial mixed-use project valued at $3.5 billion, incorporating 6.5 million square feet of office space, 9,000 residential units, one million square feet of retail, dining, entertainment, and an 18-acre park.

According to Perry Molubhoy, CEO of Atlantic Hotels Group, this dual-branded approach will enhance lodging options in Midtown by presenting travelers with distinct choices, catering to various preferences and budgets. The Residence Inn is particularly well-suited for extended-stay guests, boasting the highest occupancy rate among Marriott's brands, while the AC Hotels aim to attract design-focused visitors seeking quality and technological amenities at competitive prices.

Industry Overview

The hospitality industry in the U.S., particularly in Texas, remains robust, driven by an expanding economy and a steady influx of both business and leisure travelers. Dallas, as a major metropolitan area, is experiencing significant growth, resulting in increased demand for diverse lodging options. The city's strategic location, strong infrastructure, and vibrant real estate market further enhance its desirability for hotel investments.

In recent years, the Dallas-Fort Worth area has seen a surge in new hotel developments, with an emphasis on brands that cater to different segments of the market. The dual-brand concept has gained popularity, allowing operators to efficiently manage resources and appeal to a broader customer base. This trend aligns with the growing need for flexible accommodation options by travelers, as they seek both affordability and premium services.

Moreover, the Dallas region boasts a high occupancy rate, particularly in extended-stay hotels, thanks in part to the city’s booming workforce and corporate relocations. The area's numerous large-scale events, conventions, and attractions contribute to the sustained demand for hotel accommodations and facilitate consistent growth within the industry.

The Galleria Dallas, in close proximity to the new hotel, serves as a major retail hub attracting significant foot traffic, thereby offering additional opportunities for guest engagement and hotel utilization. Coupled with the ongoing Midtown redevelopment, the hospitality market in Dallas is poised for continued success and expansion.

Rationale Behind the Deal

The rationale for this investment is anchored in the growing demand for diverse hotel options within the Dallas market, particularly given the bustling environment surrounding The Galleria and the Midtown Redevelopment Plan. The dual-branded structure of AC and Residence Inn enhances operational efficiencies through shared services while providing varied price points for consumers.

This strategic move allows both Civitas and Atlantic Hotels Group to capitalize on Dallas’s robust hospitality landscape and cater to different market segments effectively. The project aligns with the rising trend of transformative mixed-use developments, creating an integrated environment for tourism, commerce, and leisure, which promises long-term rewards for stakeholders.

Information about the Investor

Civitas Capital Group is recognized for offering a wide array of investment solutions, particularly in the U.S. lodging and real estate sectors. The company's experience in the EB-5 capital markets allows it to attract foreign direct investment, making it a well-suited partner for projects like this dual-branded hotel. Additionally, Civitas collaborates with JD Capital, a leading Chinese private equity firm, enhancing its capital sourcing capabilities and expanding its reach within international investor circles.

JD Capital, established in 2007, has gained accolades for its investment prowess in China and has increasingly directed its resources towards the U.S. commercial real estate market in recent years. This partnership elevates the project's credibility and is indicative of increasing international interest in Dallas's vibrant real estate and hospitality sectors.

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This investment presents an attractive opportunity for both Civitas Capital Group and Atlantic Hotels Group. The dual-brand strategy significantly lowers operational costs while reaching a more diverse customer base. Additionally, the location's proximity to key urban developments and its anticipated demand for mid-range to upscale accommodations fortify the investment's viability.

The hospitality market in Dallas is well-positioned for future growth, particularly with consistent economic progress and urban development initiatives. The anticipated opening of the dual-branded hotel in spring 2018 aligns with increasing tourism and business travel to the area, further reinforcing its potential for high occupancy rates.

Moreover, teaming with established brands like AC Hotels and Residence Inn positions this project favorably within the competitive landscape as guests increasingly look for brand reliability and quality service. The collaboration between Civitas, Atlantic, and JD Capital also showcases a robust financial foundation driven by both local and international investors, enhancing investor confidence in the project's success.

In conclusion, while challenges remain in the hospitality sector, particularly surrounding economic fluctuations, this project stands as a testament to strategic planning and adaptability that can yield solid returns for years to come.

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