Aspen, Colorado-Based hotel investment and management company Terrapin Hospitality this week is doubling the size of its portfolio through a single acquisition.
Announced on Sept. 28, Terrapin acquired K Partners, a San Antonio-Texas based third-party hotel management company for an undisclosed amount.
Through this acquisition, Terrapin's portfolio grew from 35 managed properties to 70, with 7,335 rooms spanning across 13 states, including Oregon, Florida and New York.
According to a news release, "Terrapin and its affiliates have an ownership interest in 30 of the properties."
Terrapin CEO Tony Sherman said during an interview with Hotel News Now at the 2021 Lodging Conference that while he isn't looking to create a huge company, he is on a path toward expansion.
Sherman calls the K Partners deal "the beginning of our growth strategy," and his goal is to keep chasing similar deals to build a portfolio of branded midscale and upper-midscale hotels.
How the Deal Came About
Earlier this year, Paul Nussbaum and Leslie Ng became significant investors in Terrapin Hospitality. Ng and Nussbaum founded Boca Raton, Florida-based privately held investment group Waramaug Hospitality in 2012. In February 2021, Terrapin acquired a five-hotel portfolio from Waramaug.
Those five properties included the Holiday Inn Express, Plantation, Florida; Holiday Inn Express, Montrose, Colorado; Comfort Suites, Arlington, Virginia; Comfort Suites, Raleigh/Durham, North Carolina; and Candlewood Suites, Athens, Georgia.
Of Terrapin's current portfolio, Sherman said Waramaug owns 16 hotels.
Both Ng and Nussbaum will continue to support and invest in Terrapin's growth goals beyond the acquisition of K Partners, he said.
Ng said in an email interview that Terrapin's "extremely focused" business model intrigued him. That focus is to "listen to owners’ needs and hire the best talent."
"That sums up everything. Terrapin keeps things simple and does not overcomplicate things. All owners have access to the top executives at Terrapin. All results in driving higher margins for owners. I had the chance to invest in many companies, but this is the one I chose to build and grow a better mousetrap," he said.
Shawn Kvernen, chief operating officer of K Partners, will join Terrapin as senior vice president of business development.
What's To Come
Sherman said in the short term his company is focused on owning and managing five more hotels within the next two months.
"We will add 10 to 20 management contracts for the next year, by prospecting and developing new relationships with new owners or current owners," he said.
Looking ahead to the next three years, Sherman said through growth strategies, such as acquiring more management companies, he hopes to hold a portfolio of 200 hotels.
His team isn't prioritizing "tiny deals in remote places," he added.
Distressed Assets
Sherman said his team has been fortunate in the past few months to find and go into escrow on several hotels that were distressed.
He added his company is in the midst of buying two closed hotels right now "for extremely cheap" pricing.
One property, he said, is an "underperforming Radisson in the Midwest" that his team will convert to a DoubleTree by Hilton hotel.