EXECUTIVE SUMMARY:

HREC Investment Advisors is pleased to present the opportunity to acquire the 110-room Holiday Inn Express Buffalo-Airport in Cheektowaga, NY (sometimes referred to as the “Hotel” or “Property”) and located at the following address: 131 Buell Avenue, Cheektowaga, NY 14225.

The Holiday Inn Express sits adjacent to the Buffalo-Niagara Airport that has already seen a significant rebound since the pandemic as well as having massive renovations completed in 2021.The biggest component to how the Buffalo market will rebound is undoubtedly the return of Canadian travel to the United States. As the closest American city to Canada’s most populous city, Toronto, the Buffalo hospitality market relies heavily on tourism from across the northern border. While the Property was hit hard by the COVID-19 pandemic and Canadian tourism rebounding at a lower-than-expected rate, occupancy and RevPAR for the entire Buffalo market should see dramatic growth once this market returns to pre-pandemic activity in the coming years.

According to Land Line Media, Canada is suspending many of its vaccination requirements beginning June 20th, 2022. Beginning June 20, employers in the federally regulated air, rail and marine sectors will no longer be required to have mandatory vaccination policies for employees. There is also a large push from border-town Canadian mayors, such as Niagara and Sarnia, calling for the Canadian Federal Government to lift travel restrictions such as the EnterCan app that requires everyone entering Canada to submit their vaccination information to the Canada Border Services Agency ahead of their arrival.

Beyond the University of Buffalo’s athletics, the city is also home to two professional sports teams: the Buffalo Bills and the Buffalo Sabres. The Buffalo market contains several prominent businesses that serve as a backbone to the local economy: M&T Bank, Delaware North, MOOG Inc., Tops Friendly Market, Computer Task Group, and more. The area also is home to four major healthcare facilities as well: Roswell Park Comprehensive Cancer Center, Kaleida Health, Buffalo General Medical Center, and the Mercy Hospital of Buffalo.

Terms of Sale

• Tenure: Fee simple

• Price: Please contact HREC for pricing guidance

• Management: Free and clear of management

Please DO NOT contact the staff, management, or ownership of the Hotel to request additional information or to arrange a site tour.

Investment Highlights

Hotel is in Popular Tourism Market

The Hotel is ideally located near several of Buffalo’s key leisure demand generators such as Niagara Falls, the University of Buffalo, Highmark Stadium, KeyBank Center Arena, the Buffalo Zoo and Museum of Natural Science, several casinos, and Six Flags Darien Lake Amusement Park. Commercially, the Hotel is immediately proximate to the Buffalo Airport and close to the headquarters of M&T Bank, Delaware North, MOOG Inc, and Kaleida Health. Buffalo is home to 40,000 students from three separate higher education institutions: Buffalo University, Canisius College, and Daemon University.

The Return of Canadian Tourism

As the closest American city to Canada’s most populous city, Toronto, the Buffalo hospitality market relies heavily on tourism from across the northern border. While the Property was hit hard by the COVID-19 pandemic and Canadian tourism rebounding at a lower-than-expected rate, occupancy and RevPAR for the entire Buffalo market should see dramatic growth once this market returns to pre-pandemic activity in the coming years. As of now, Canadian travel to the United States for the first few months of 2022 is only 1/3 that of 2019, however, monthly travel figures are continuing to rise slowly. As travel returns to pre-pandemic levels, occupancy and RevPAR for the Buffalo market will rise with it. Each Property has an optimistic budget for 2022 and has started the year strong. Beginning June 20, Canadian employers in the federally regulated air, rail and marine sectors will no longer be required to have mandatory vaccination policies for employees. This, coupled with a large movement from Canadian officials on border-towns such as Niagara and Sarnia to have the Canadian Federal Government lower restrictions such as the ArriveCan app that requires travelers to navigate a pre-arrival/crossing app that approves your vaccination status.

Significant Upside Potential

The return of Canadian travel and a well-allocated PIP are the two factors that contain the most upside potential for the Property. YE 2019 occupancy for the Property was up to 63.9% and we have seen a % Change in Occupancy (’20-’21) of 119.4%, signifying that the market’s occupancy is returning to the 2019 levels. Several of the properties in the competitive set are significantly newer products as well, meaning that a well-allocated PIP that re-invigorates the Hotel will be incredibly important and valuable in terms of capturing market demand. The Property is also adjacent to the Buffalo Airport, which is already seeing a very strong rebound from the pandemic. According to the Buffalo Niagara Airport website, the most recent passenger statistics are from October of 2021, which shows a 247% increase in monthly commercial passengers from the previous year. A total of 5011 flights passed through Buffalo Niagara Airport in May 2022. The Property also has the potential for a multi-family/micro-apartment conversion due to its size and excellent location.

Unrecognized Favorable Impact from Departing Supply and Limited New Supply in Market

There is a significant amount of unrecognized favorable impact stemming from the departure of the 200+ room Holiday Inn that left the market around the onset of Covid. According to CoStar, there is only one unnamed property under construction in the Buffalo market which would raise total rooms supply for 180 rooms. Although there are another 756 rooms in the pipeline, these have only been planned or proposed and no development has taken place to date.

Excellent Location Near Major Transportation Hubs

The Holiday Inn Express is adjacent to the Buffalo Niagara Airport which has seen a strong rebound from the pandemic that will only continue to rebound as Canadian travel to the US picks back up. The airport also recently finished significant renovation to revamp the building. The Hotel is conveniently located near the major interstate highway of I-90. I-90 runs north-south through Buffalo and East-West throughout the rest of the country. The location of Buffalo means that anyone heading east towards Boston and New York City, west towards Cleveland and Chicago, or north towards Toronto will drive directly through Buffalo, NY.

Offered Well Below Replacement Cost

The opportunity to acquire this asset well below replacement cost allows an investor to benefit substantially from a combination of location in a growing economy and upside opportunity. The national average cost of building a hotel has increased significantly in the past few years. Given the size and condition of this Hotel, as well as the increased cost of labor and supplies in today’s market, we can reasonably assume that the construction of this Property would be significantly more than the target selling price of the asset.

Fee Simple Interest

The Property will be offered as fee simple, which will be extremely attractive to the investment community.

Offered Unencumbered by Management

The Holiday Inn Express Buffalo-Airport is being offered unencumbered by a management agreement. An investor possesses the opportunity to bring in a new management company or to act as an owner/operator and seek to revamp the operational strategy of the Hotel, implement strategic cost control initiatives, and employ more aggressive yield management strategies.