Life House Secures $100M in Real Estate Equity Capital for Continued Expansion
NEW YORK--(BUSINESS WIRE)--Jul 12, 2019--
Life House, the vertically-integrated hotel company with a growing collection of lifestyle boutique hotels, has secured $100M in equity commitments (approximately $250-300M in total asset value) from Boston-based investment and development firm Blue Flag Partners (“Blue Flag”) to fund its continued, rapid expansion through the acquisition of seven to ten additional hotels.
The announcement follows the news that Life House has taken over the operation of The Roberts Collection, a historic 58-room hotel in Nantucket, MA, acquired by Blue Flag in April. This season, Life House is operating The Roberts Collection as part of its white-label, tech-enabled management platform and will begin restoration of the hotel in fall 2019, transforming the property into a locally-rooted hotel by Life House. The Blue Flag partnership provides fuel for Life House’s continued rapid asset-light expansion plans.
“Since day 1 we have been acutely focused on driving value to our hotel owners through technology advantages and contextually responsive design and we’re thrilled to see that Blue Flag has recognized this value and formalized a long term partnership with us,” says Rami Zeidan, CEO and Founder of Life House. “To date, we have only raised $10 million in venture capital and this partnership further demonstrates our ability to scale a lifestyle hotel brand and management company in a capital-efficient manner to maximize returns for our venture capital investors.”
Life House has leveraged its venture-backing from investors including Global Founders Capital, Comcast Ventures, and Trinity Ventures to develop proprietary technology that drives incremental revenue and automates operational efficiencies, yielding a 30-50% higher return on hotel investments for its real estate partners than traditional management companies. Through the repositioning of the Nantucket project alone, Life House is projected to increase NOI by >100% per year, translating to a $15M increase in the value of the property and catalyzing Blue Flag’s interest in a partnership to grow a larger scale platform.
“We selected Life House after a competitive process, and we’ve quickly seen the massive value they’re able to create. Since we closed on the acquisition this past spring and in advance to repositioning the asset, they are already driving approximate 40% higher total revenue with nearly 80% direct web bookings,” says Terry Sanford, Co-Founder of Blue Flag. “We’ve been very impressed with Rami and the Life House team and we’re actively looking to build our portfolio with them around the country.”
During its first year of operation, Life House has signed over 500 rooms across nearly 10 projects, spending less than $5M of venture capital and positioning the company to raise a Series B this summer. By 2020, Life House will have over 20 hotels open or under construction across the United States, in markets including Nantucket, Brooklyn, Denver and Lake Tahoe.
“As we did with our Nantucket project, this investment platform allows us to continue to couple Life House’s management, technology and design capabilities with real estate opportunities in high-barrier-to-entry markets traditionally overlooked by value-add investors. The result is authentic hospitality experiences for our guests and long-term value creation for our investors,” added Jason Brown, a Partner at Blue Flag.
Across its current portfolio of four operating hotels in Miami and Nantucket, Life House is driving between 50-80% of bookings direct to its website (representing a 200-300% improvement over a typical independent hotel in the U.S.) while increasing net operating income between 40-100% during the first year of operation.
In contrast to the growing number of apartment and short-term rental companies - which sign long-term leases and take on significant balance sheet liabilities - Life House is an asset-light management company that earns fees for designing and managing hotels. This business model is more similar to an enterprise SAAS product than a real estate product, making it an attractive venture for Silicon Valley investors.
Life House continues to innovate and establish its operating model by maintaining an initial focus on smaller hotels, which are the most underserved and most challenging to operate profitably.
“We’re quickly proving to be, along with our real estate partners, the best buyers of hotels with fewer than 150 keys,” says Bryan Dunn, Life House’s VP of Acquisitions and Business Development. “Our technology-enabled approach to hotel operations allows us to extract maximum value for our investors from these traditionally overlooked assets.”
About Life House Hotels
Life House Hotels (“Life House”) is a New York-based lifestyle hotel brand and management company that is enabled by proprietary software and backed by Silicon Valley venture capital. Life House’s technology improves the profitability of hotels by reducing the costs required to operate a hotel through automation and centralization of back office functions, while driving direct bookings through low cost digital marketing advantages. The company operates properties across two core verticals: branded management of locally-rooted lifestyle hotels conceptualized and designed by its in-house team, and white-label hotel operations on behalf of independent hotel owners. For more information on Life House, visit https://www.lifehousehotels.com/.
About Blue Flag Partners
Blue Flag is a vertically integrated investment, real estate development and branding firm operating out of Boston, MA. Blue Flag has built a reputation for acquiring unique residential and hospitality assets in high-barrier-to-entry markets and currently targets raw land, historic structures, hotels, campgrounds and restaurants. Additionally, Blue Flag makes strategic investments in related operating companies and brands. Blue Flag’s current portfolio includes over $250 million in active projects spread across large scale residential developments, a hotel collection, retail and restaurant portfolio. Blue Flag has worked with recognizable partners including AutoCamp, the leading brand in the outdoor hospitality or “glamping” space, Whitman Peterson, a hospitality and residential focused private equity firm, and The Lyons Group, Boston’s largest nightlife operator. Blue Flag pairs its discretionary capital and strategic partnerships to deliver outsized growth to its portfolio of assets and operating investments. To learn more about Blue Flag, visit www.blueflagpartners.com.
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Vice President, Acquisitions
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK MASSACHUSETTS
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SOURCE: Life House
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PUB: 07/12/2019 08:00 AM/DISC: 07/12/2019 08:01 AM