Property Name

The Hilton Hotel


Greenville, SC


256-room full-service hotel

The Hilton Greenville

The Hilton Greenville is a 256-room full-service hotel located in Greenville, SC. In partnership with an institutional investor, our Fund I acquired this hotel from Och-Ziff, a New York based private-equity firm, in 2013 for $16.75 million. The replacement cost for this hotel was internally estimated to be approximately $51.2 million ($200,000 per key), representing a $67.3% discount-to-replacement based on the negotiated acquisition price. Urbana Varro identified and leveraged several critical factors that ultimately yielded the opportunity to acquire this asset at a substantial discount to both its replacement cost (referenced above) and its market value.

Acquisition Strategy

Deferred Maintenance

As anticipated due to the age (1986) and the recent ownership turnover (2010) of the asset, the physical due dilligence process conducted by Urbana Varro identified a number of deferred maintenance (mechanical, electrical, and plumbing) concerns that required capital investment in the near term. Had Och-Ziff addressed these capital expenditures, they would have effectively reduced their investment returns to their investors, and therefore elected not to allocate additional funds to the property.

Upcoming Property Improvement Plan

Hilton was mandating a property improvement plan(estimated at $1.3 million) which targeted the replacement and improvement to case goods, mattresses in guest rooms, as well as repaving the parking lot and entryway areas. For the exact same reasons as the deferred maintenance, we were able to leverage the required PIP expenditures to lower the purchase price.

Timing of Institution's Divestiture

Urbana Varro understood that Och-Ziff was in the process of commencing the capital raising for a new fund, which likely, for purposes of documentation of performance and the maturity of its prior funds' investment horizons, necessitated the disposition of the Hilton asset.
While attributing a quantitative value to the aforementioned circumstances would be largely speculative, the fact that the seller was transitioning into the disposition phase of their investment cycle likely contributed to the degree of accommodation, with respect to timing and purchase price, that the seller afforded Urbana Varro throughout the contract period.

Throughout the implementation of initiatives aimed at improving the operating efficiency, food and beverage services, and meeting space amenities, net operating income jumped from $1.4 million in 2012 to nearly $2 million in the 4th quarter 2013 (T-12).

Click here to download the The Hilton Greenville SC Return Assumption.

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