Why Noble pushes deeper into BLTA arena

ATLANTA – Noble Investment Group has now eclipsed 100 branded long-term accommodations (BLTA is not to be confused with extended-stays drifting into a transient operating model) with news breaking about the acquisition of a 14-property Woodspring Suites portfolio from a single owner with a preponderance of locations in Florida. Terms of the deal were not disclosed.

Noble Principal and Head of Acquisitions Dustin Fisher told Hotel Investment Today that significant scale created in a little more than 24 months should help further drive asset value for an operating model that is sensitive but easy to replicate when mastered.

Noble stated that the portfolio comprises Woodspring Suites properties located across a diversified set of high-growth U.S. markets with strong economic fundamentals and multiple demand drivers. It added that the assets are recently developed, exhibit strong in-place operating performance, and were acquired at a basis meaningfully below replacement cost.

When you have those secular tailwinds, as long as you are still being disciplined around the markets – and we want to be in deep markets that are long term growth markets, not contracting markets – it emboldens us to get to scale and continue to grow that footprint meaningfully as part of our acquisition and development strategy.

Dustin Fisher

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Without getting into specifics, Fisher said seller stress points are manifesting themselves in different ways right now, more so now than ever. “While I can’t comment directly on this particular seller’s motivation, them being aware of Noble’s track record in portfolio acquisitions and certainty of closing in what has been a very uncertain market is incredibly valuable,” he said. “As such, we find that a preponderance of our transaction volume is done off market, and there’s a value ascribed to that certainty when not a lot of people are able to execute on portfolios.”

The transaction also aligns with Noble’s capital formation strategy by deploying institutional capital into a scalable platform designed to generate durable income and long-term value creation. Noble currently has $5 billion assets under management.

This deal also represents the continuation of a strategy that Fisher said coalesces around recent and continued housing affordability challenges that continue to manifest themselves across the U.S., as well as the tailwinds of constrained supply and a mobile workforce. He added that Noble doesn’t see any of those tailwinds abating.

“When you have those secular tailwinds, as long as you are still being disciplined around the markets – and we want to be in deep markets that are long term growth markets, not contracting markets – it emboldens us to get to scale and continue to grow that footprint meaningfully as part of our acquisition and development strategy.”

When asked about how Noble is managing ongoing asset stressors related to costs, Fisher reiterated the importance of market selection.

“The operating model is fairly predictable when implemented right and controlled appropriately, namely, because the number of FTEs are so limited compared to traditional hotels,” he said. “So, it’s making sure you’re being defensive about the top line, which is being prudent on market selection.”

For this new deal, Fisher said the concentration of hotels are in Florida, which Noble views as a long-term secular growth market. “That’s where we’re spending more time being thoughtful about how we continue to roll out this branded long-term accommodation model – growth markets with the diversity demand that will be defensible for the long term.”

As for using the branded long-term accommodation moniker versus extended-stay, Fisher explained that traditional extended-stay in upscale and upper upscale is becoming more of a transient model – three to four nights.

“So, what we are doing really is solving a more long-term solution, which I do think differentiates itself from the traditional catch-all extended-stay,” he said.