1095 Market Street
About this Property
Synapse Development Group LLC (“SDG” or “Synapse”) and AQARAT (Kuwait Real Estate Company) (collectively, the “Partnership” or “GP”) is seeking interest from qualified accredited investors to provide $5.7 MM+ of capital for the redevelopment of 1095 Market Street, San Francisco, CA (the “Property”).
The Property is an eight-story, 71,944 gross square foot, historic building located at the corner of Market Street and 7th Street in San Francisco’s burgeoning Mid-Market neighborhood. The Partnership has plans to re-develop the Property into a nine-story 203-key YOTEL branded hotel totaling 84,000 SF that includes a 3,350 SF restaurant, 3,500 SF roof top bar and 1,500 SF of meeting and flex space.
The Partnership acquired the property on April 25, 2014, and has spent the last fifteen months working through its pre-development strategy. Upon approval of the Site Permit from the City of San Francisco (expected to occur by the end of August 2015), the Partnership will commence construction (currently estimating structural construction start in fall of 2015). During the pre-development period, the Partnership has worked to ensure that development and construction can begin immediately upon recapitalization.
- Investment Returns: Returns to the LP investors are projected to be a 1.8x multiple and a 19.1% levered IRR with a 11.5% stabilized cash-on-cash yield (2019).
- Proven Operator: YOTEL San Francisco is part of a strong international pipeline, advancing the company’s goal of having 50 hotels open or under development by 2020. YOTEL recently announced expansion plans targeting key city centers and international airports in Asia, Europe and North America with more than 3,000 rooms scheduled to open by 2018. As of year-end 2014, YOTEL New York achieved strong occupancy of over 90% (vs the rest of the New York market in the mid 80’s) and ADR of over $200 with a GOP margin above 45%. With continued strong performance in 2015, YOTEL New York continues to prove that “affordable luxury” is the future of the hotel industry.
- Turn-Key Development: Prior to the closing of the raise, the Partnership will have mitigated much of the development and construction risk by completing design, successfully attaining major approvals for conversion of the Property, engaging a general contractor, and buying-out major construction trades.
- Emerging Urban Submarket: Mid-Market is one of San Franciso’s most rapidly transforming neighborhoods and has become a hub for technology companies and venture capital firms including Twitter, Uber, Zendesk, Spotify and Benchmark Capital.
- Limited Hotel Supply: The San Francisco market is geographically constrained and difficult to obtain development rights. The amount of new hotel supply (in an under supplied market) is only 517 keys in 2014 and 2015 according to HVS. The San Francisco hotel market operates at 83.9% occupancy according to PKF’s latest hotel market report and is expected to remain strong.
- Sponsorship: The Partnership between Synapse and AQARAT creates a sponsor team that is experienced, entrepreneurial and well capitalized. Synapse currently has $175mm of assets under management with its three most recent deals delivering investors 30%+ IRRs.