Results, pure and simple. Getting results and having a reputation for getting results is all it takes to be successful in hotel brokerage, or so says Washington, D.C.-based Molinaro Koger.
Getting results like the $7.5 million sale of the Bellevue Hotel in Washington, D.C., for Bear Saint Properties and the $34 million sale of Columbia Hotel and Conference Center in Columbia, Md., and the Cross Keys Inn in Baltimore, Md., for The Rouse Co. are what the firm is known for.
Each transaction presented Molinaro Koger with different challenges, but it created a marketing strategy that worked, and it closed the deals quickly.
For example, the Bellevue Hotel, although well-located on Capitol Hill, presented a number of challenges because it was relatively small, midblock, nonflagged and in need of capital investments due to its age (built in 1929) and predominant market (intensive tourist/midmarket), says Bear Saint Properties' Russell C. Lindner, managing director.
"In addition, the historical financial performance did not justify the sort of price we thought should be obtained, given the inherent value of the location," Lindner adds. "So we needed to find that slice of the buyer market that not only did not look to historical income-stream to develop its valuations, but could also look beyond the property's physical constraints - a 'boutique' buyer, if you will."
After hiring Molinaro Koger in late August 1996, the brokerage firm prepared its offering package within two weeks, negotiated with several parties in October and November and delivered a purchase contract in late November, says Lindner. The property was sold in late February 1997 to Philadelphia-based Amerimar Enterprises Inc.
"Molinaro Koger did an excellent job of developing an appropriate marketing strategy and then executing upon it," says Lindner, adding that he thought $7.5 million was "a very fair price."
Molinaro Koger worked its magic once again when in the last quarter of 1997, Rouse Co. hired the firm to sell two properties, which it had owned for more than 20 years. Because Rouse had owned the properties for such a long time and because they were part of mixed-used projects also owned by Rouse, it was critical to find a strong, capable purchaser.
"As a result, our marketing was geared toward large companies and, more specifically, public companies, because the Rouse Co. wanted to be aligned with a purchaser and future owner that would work with them on larger issues within the mixed-use developments," says Robert T. Koger, president of Molinaro Koger.
After conducting an initial bid process, which resulted in 10 bids by December 1997, Molinaro Koger narrowed the field of qualified buyers to three and asked for final bids in January of this year. Five months after initiating the marketing process, Molinaro Koger sold the properties to CapStar Hotels, now MeriStar Hospitality.
Of course these kind of results don't just happen, you need the experience and understanding to make them happen. "Multiple factors come into play in a hotel transaction: franchise, financing, environmental, engineering, feasibility, and the potential for renovation and repositioning of the property within the market," says Koger. "Hotel brokerage is a specialized field within commercial real estate because hotels have intrinsic worth as both real estate and as operating businesses. Extensive knowledge is required to structure these complex transactions."
This extensive knowledge comes from the years of experience that its executives have under their belts. For instance, Koger's entire career has been spent in real estate brokerage and, over the last three years, his individual sales volume exceeded of $500 million. He will also serve as the 1999 president of Hotel & Motel Brokers of America. And John Jameson, who heads up the Midwestern office in Chicago, is a 16-year veteran of the hospitality industry, with a background in operations, management and development. Company CEO Joseph Molinaro has more than 40 years' experience in hospitality brokerage and has structured more than 400 sales. Not to mention, Molinaro's 40 years were served strictly with Molinaro Koger.
Originally named Joseph C. Molinaro & Associates Inc., Molinaro founded the firm in 1959 to provide specialized real estate services to the rapidly growing hospitality industry. From its inception, the company has handled hotel transactions, sponsored limited partnerships and arranged financing for purchasers. After growing steadily for several years, Koger joined the company in 1991. In 1995, Koger was named president, and the company was renamed Molinaro Koger.
To date, the company has sold more than 500 hotels with an aggregate value in excess of $2 billion. Although rooted in the Mid-Atlantic and Northeastern states, Molinaro Koger has expanded its reach well beyond those areas.
"Molinaro Koger works extensively in these areas as well as the South Atlantic and Midwestern states," Koger adds. "We have a branch office in Chicago from which we serve the West and Midwest. We are currently handling properties in more than 20 states."
Dealing with both full- and limited-service properties, ranging from four-star, luxury projects to boutique resorts and multiproperty portfolios, Molinaro Koger intends to expand its international reach in the near future. "We currently work in Europe as well as the United States and the Caribbean," Koger says. "We are handling 12 properties in Europe, and we are in the process of listing several more hotels. We have two persons dedicated to working the European market. We are in the process of opening an office in London to grow the European practice."
The London office is expected to be fully established in the first part of 1999. Eric Kudlak, who joined the company this year to spearhead transactions in Europe, will be responsible for the London office.
Molinaro Koger puts all its experience, knowledge and geographical reach to good use when brokering a deal. It has created its own database of potential buyers, and this database is used to select the best buyer for a property.
"The most important aspect is selecting a buyer who will close the transaction, which is why Molinaro Koger learns as much about the buyer as we do about the hotel we are marketing," Koger says. "Molinaro Koger maintains extensive records on hotel investors. Within this investor database, there are a variety of investor types, each with its own requirements and abilities. With more than 6,000 contacts in our database, we clearly have a broad market audience. Each property in our inventory has specific attributes that make it appropriate to certain levels and types of investors, depending on their investment goals and parameters. Our job is to match investors with the appropriate assets."
Molinaro Koger uses this database to pinpoint potential buyers and expedite the sell of a property for its client. According to Koger, the firm custom-tailors each marketing strategy to suit the disposition situation. "The firm is renown for marketing packages that provide in-depth, accurate information," he adds. "Time is at a premium for buyer and seller. Effectively catering to this need for succinct, pinpoint detail is our specialty."
Because of its wide exposure to potential buyers, Molinaro Koger averages between 15 and 20 offers per property. And its closing rate on property sales is 95%. "Molinaro Koger has an exceptionally high rate of closing on the hotels listed with the firm," Koger says. "We screen buyers very thoroughly so that every deal that goes under contract closes."
With this kind of track record, Molinaro Koger sees no need to change the game plan. As a matter of fact, Koger adds, "Five years from now, Molinaro Koger will be the acknowledged leader in hotel brokerage in the United States for upper and midmarket properties based on the results we achieve."