Answer extracted from the The Single Source podcast — listen to the full episode below.
How can investors achieve significantly better pricing on hotel acquisitions compared to market norms?
Investors unlock significantly lower acquisition costs by offering certainty of close to distressed sellers within 30 days, with no financing contingencies. This approach delivered a 12.25% cap rate on a 364-key Marriott hotel portfolio—50 to 100% better than the standard six to eight cap rate market range—by addressing properties struggling with underwater debt or imminent loan maturities.
Certainty as Currency in Distressed Markets
The traditional hotel buyer must navigate debt approval, appraisals, and contingencies—a process that typically stretches months. Distressed sellers carrying underwater debt or facing loan maturity deadlines cannot afford that timeline. By eliminating financing contingencies, a buyer immediately solves the seller's central problem: the deal closes, the obligation resolves, and the lender gets paid.
As Raheem Charania explains in the episode, this certainty is especially powerful when capital flows have slowed and distressed assets are piling up. The seller does not need to wait for the market to recover or hope another buyer will eventually appear.
The Marriott Portfolio Case: Data-Driven Execution
Woodvale's acquisition of a Marriott-branded hotel portfolio illustrates the mechanics in real time. The portfolio comprised 364 rooms and closed at 12.25% cap rate on last year's EBITDA—an exceptional yield in a market where similar assets typically command six to eight cap rates. The pricing advantage represented between 50 and 100% better terms than competing offers.
The speed of execution was non-negotiable: a 30-day certain close. That compressed timeline and the absence of financing contingencies signaled to the distressed seller that the deal would actually happen. No appraisal delays, no lender pushback, no last-minute renegotiation.
Raheem Charania's personal and firm commitment deepens that certainty further. As founder and managing partner of Woodvale, he backs every deal alongside investors—his family office is the largest LP in the fund's transactions. That alignment eliminates the suspicion that a fund manager has misaligned incentives. A point detailed in the broader strategy is that this co-investment model differentiates Woodvale from competitors and makes its offers demonstrably credible to sellers.
"You make your money when you buy it. So if you buy it low enough, you can be fine."
Raheem Charania — Founder and Managing Partner, Woodvale. With decades of commercial real estate expertise, Charania founded Woodvale as an asset-class-agnostic opportunistic fund backed by his own family office. His approach emphasizes acquiring distressed properties at steep discounts and relying on operational expertise and market timing to deliver outsized returns to investors.
The return profile confirms the thesis. After purchasing the Marriott portfolio at that 12.25% cap rate, Woodvale's investors achieved returns of 2.5% to 3% quarterly within 90 days of acquisition—demonstrating that the discount secured at purchase translated directly into investor cash flow.
The broader market context makes this strategy durable. As discussed in this podcast, extended periods of high interest rates, low transaction volumes, and slowing global capital flows have created a surfeit of distressed commercial real estate assets. Sellers in that environment do not negotiate on price—they negotiate on certainty. An investor who can remove all execution risk captures that pricing advantage in the form of lower acquisition basis and higher yields.
Key takeaways
- Certainty of close and elimination of financing contingencies are worth 50–100% in acquisition pricing discounts in distressed markets.
- A 30-day close timeline appeals directly to sellers facing underwater debt or loan maturity deadlines, solving their core problem immediately.
- The Marriott portfolio achieved 12.25% cap rates versus six to eight cap rates in standard market transactions, demonstrating the real-world pricing power of execution certainty.
- Co-investment by fund management (largest LP position) signals credibility to distressed sellers and aligns incentives with investors.
See also
What market conditions have created buying opportunities in commercial real estate in 2024?
Extended periods of high interest rates coupled with low transaction volumes in commercial real estate, plus slowing capital flows from macroeconomic events, have created significant buying opportunities and lower asset valuations.
What property types and strategies does an opportunistic commercial real estate private equity fund target in today's market?
Woodvale is asset class agnostic and focuses on identifying properties that deliver the highest yields for investors. The firm pursues deals where they are the largest LP in their own investments, differentiating themselves from competitors.
Why does cannabis private credit offer portfolio diversification benefits for income allocators?
Cannabis yields are completely uncorrelated from the rest of the private credit market and from interest rates, offering high returns independent of broader market movements and economic cycles.