So the general giste is you have boutique all-suite hotels from a first-time hotel operator and investor (used to invest in apartments and airbnb/str single and some multi-family). In growing markets like Portland, Austin, Nashville, Asheville etc.
The promote structure is 9% pref 80/20 to 13% 70/30 to 18% 65/35 therafter
1% asset management fee, 3% development fee, .5% asset disposition and acqusition fees.
Of course the asset management fee, acquisition and disposition fees would have a relatively normal discount rate.
But what would you discount the promote at. I was thinking probably somewhere in the high teens, maybe 20%. But that's just based off of feel. Anyone have any good dcf models from actual deals for new build/relatively high risk projects?
P.S. this is all for purpose of modeling a GP DCF to get a sense of it's inherent value, so the GP can maybe sell a piece of their end.
I think high teens is a good starting point -- especially with the way you described the deal and the inherent risk attached to it. I wouldn't necessarily think of the DCR as a set number, but moreso as a spread to say the DCR you are using for other parts of the deal. Shops with steady income and cash flow streams typically use 8-10% DCR...I'd typically adjust from there. But also keep in mind what the end-game is. If it is for a model to be shared to strike a deal, just know whatever you input, the other party is likely going to claim "multiples and discount rates for development are just too risky" and inflate accordingly.
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