Inside Chimera’s ‘sniper-like’ approach to deals

NAPLES, Florida — Chimera Hospitality was formed earlier this year as a three-headed family operation with a targeted “sniper-like” approach to acquiring assets.

The Naples, Florida-based hospitality firm, formed by industry veteran Deno Yiankes (who has spent over 30 years at White Lodging) and his sons, Alex and Eric, announced its first acquisition, the voco Sarasota in Florida, last week.

Deno Yiankes said the firm is operating from a solid thesis and has a great idea of what it is and what it isn’t.

“We think this is the right time to be looking,” he said. “You’re not going to see us buy a portfolio of 50, 30- to 40-year-old properties along an interstate… We’re going to be more laser-focused. I call it sniper-like, and we really pick off a few things that we think have high potential. I find that liberating, frankly, versus if I were running a fund right now and having to do some things that maybe aren’t in our best interest from an investment standpoint.”

We think this is the right time to be looking... We’re going to be more laser-focused. I call it sniper-like, and we really pick off a few things that we think have high potential. I find that liberating, frankly.

Deno Yiankes

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Yiankes, who sat down with Hotel Investment Today after the announcement, stepped away from his role of president and CEO of investments and development at Merrillville, Indiana-based White Lodging in 2020, with this company formation as the destination. But he said he wanted his sons, who had just graduated from college, to first go out in the hotel investment world for a few years.

Yiankes remains a board member and paid senior advisor for White Lodging. He said he had planned to leave that role by now, but things changed when his mentor, White Lodging founder Bruce White, tragically passed away in 2023 after a battle with cancer, and Yiankes extended his consultant role.

Chimera was founded earlier this year. Yiankes said the company isn’t raising capital but using its own equity and sourcing partners to finance deals. The company wants to be at least 50% on each deal and find a partner like  Monroe, Louisiana-based InterMountain Management who went 50-50 on the voco Sarasota. InterMountain will also manage the property.

“Our goal is to be a minimum of 50%. We may be more, but the point is, it’s our own money,” Yiankes said. “We evaluated doing the GP-LP [model] and raising a fund and we convinced ourselves that… we’re going to be capital constrained. One thing I’ve learned is that sometimes it’s better not to have too much money. It’ll force a discipline for us.”

Chimera will grow slow and steady, Yiankes said, with a plan for three to five deals over the next five years.

“That’s our vision and then we’ll see where it goes from there,” he said. “Then it’ll be up to my sons how aggressive or not aggressive they want to go after that.”

Yiankes said the company doesn’t need to scale fast. He just wants to pick the right deals.

“Our cost of capital is fairly favorable, even though we are a startup. We were pleasantly surprised at the three different financing options we got on the [voco Sarasota],” he said.

When asked how Chimera will win deals, Yiankes said it’s more about picking off the right deals.

“It’s not so much how we’re going to win over the next guy. It’s that we only have to pick a few,” he said. “We just want to pick three to five. So, I’m very confident, just based on statistics, that we’ll be able to find them.”

Yiankes said the main driver for forming Chimera was his desire to work with his sons. Both of his sons worked for brokerage firms and then with independent owner-operators until this year. Now he said they are serving as vice presidents of acquisitions and are tasked with finding and underwriting potential deals.

The name is rooted in Greek mythology, with Chimera being a three-headed monster.

Chimera Hospitality completed the acquisition of the voco Sarasota in Florida on October 29.

Inside the Sarasota deal

Yiankes said the trio has been working on the voco Sarasota deal since April and it finally closed on October 29 (the seller and price were undisclosed). He said they love the market dynamics in Sarasota, especially the lack of new supply over the next few years, which easily aligns with the company’s thesis of acquiring high-quality, differentiated properties in a growing market that the company believes are not operating at optimal levels.

“We don’t need to be in the top 50 MSAs. We just want to be in the MSAs that we feel have a little spurt over the next couple of decades,” he said.

“There are only seven hotels in downtown Sarasota, and one of them, a 300-room Hyatt, is in the process of being demolished to be replaced with a Ritz-Carlton-branded residential. So, you have literally 20% of the room inventory going out with no hotels under construction. We have at least a three-year run here, probably more like four, where there’s going to be limited to no supply growth.”

Yiankes said the thesis stems from the belief that there will be muted new supply in most urban markets in the coming years due to the high cost of development.

“Part of our analysis was considering whether we do ground-up development,” he said. “I can think of 20 reasons why, from an investment standpoint, I’d rather buy an existing hotel today, with the right criteria, than go out and build a ground-up.

“If the property is well constructed, if it’s good real estate and it’s in a market that has solid growth metrics, that tells me that I’m probably going to invest in something that’s going to see greater appreciation and faster appreciation than most. That’s what led us to the voco and what we’re going to use as a driving force for our next investments.”

Yiankes said he feels liberated about Chimera’s flexibility with potential investments.

“We’re going to stick with what we consider to be premium-branded property,” he said. “So, you’re probably not going to see us doing independents… We think with soft branding and lifestyle branding today, you can have your cake and eat it too.”

Working with family

The collaboration between father and sons is going very well, Yiankes said, thanks to their unified vision.

We’re going to be opportunistic, with a bias toward holding longer rather than shorter. Because, by definition, if we believe our thesis, why wouldn’t we?

Deno Yiankes

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“We all see the opportunity and the ability to have different perspectives. The one huge benefit for me is working with two gentlemen that are in their late 20s and seeing and hearing their different perspectives,” he said. “They may defer to me on some things, just based on my experience, but they’re the future. So, for me to be able to be working and hearing their thoughts, I’m finding it very invigorating.”

He said his sons have changed his thinking on design issues, particularly when they walk through hotels, and especially on how to use social media to gain a great perspective on hotel development.

“Two years ago, I would have probably said I would be the gray-haired guy saying to slow down,” Yiankes said. “But I’m finding I’m actually a little more optimistic than they are… In some cases, they’re scratching their heads saying, ‘Why are we spending time on this? We already know the answer.’ And nine times out of 10, they’re right.”

In terms of hold time for assets, Yiankes said he’s cut more from a long-term perspective.

“We’re going to be opportunistic, with a bias toward holding longer rather than shorter,” he said. “Because, by definition, if we believe our thesis, why wouldn’t we?”

When asked about the biggest lessons he learned during his time at White Lodging, Yiankes mentioned his amazement at talking with other hotel investors over the years, who always focused on the art of the deal.

“You talk to them for 60 minutes and 58 minutes is about how they put this great deal together and this financing and this and that and they don’t want to talk about operations,” he said. “I learned from Bruce, that it’s an operating business.

“Your associates at the property level are the ones that drive the value. You don’t do it in your corporate office. You have to appreciate that your operating team needs to be able to focus on operating the hotel and you can’t create distractions for them with all your owner issues. Let them operate the hotels and do what they do best and give them the tools to do that… That’s where magic occurs.”