Disciplined Investing Means Waiting for the Right Opportunities

What We Don't Buy Reveals as Much as What We Do

"What's important for investors to know about our process is if we are moving forward on an opportunity, we're doing it after vetting hundreds and hundreds of other deals that we've ultimately turned down. If we are proceeding on a deal, we've found something special that has risen to the top, passed a battery of tests, and literally checked all the boxes," explained Chad Cooley, AWH Partners Co-Founder and Managing Partner.

This discipline has built AWH into a $2B+ hotel investment platform spanning more than 10,000 keys across 45 investments-proof that rigorous processes are more important than any single "yes".

Going back to 2022, as the market was fully recovering from the COVID-19 recession, AWH Partners issued a conservative outlook that was counter to the prevailing optimistic forecast for the hospitality sector because of the travel rebound. Brokers and industry forecasters at the time were calling for double-digit RevPAR growth and a rush of transaction volume. Our own underwriting, shaped by experiences in prior downturns, pointed to a more uneven recovery. When we shared a more cautious view with investors, some expressed skepticism and brushed aside our perspective. Our market analyses and outlook are grounded in proprietary data rather than market consensus, and, as we saw unfold in the years following, increasing interest rates, escalating operational costs, uneven RevPar/NOI recovery, and impaired balance sheets created a challenging environment across the hospitality sector.

In the following 2.5 years, our exacting standards meant we executed only a single transaction, notwithstanding our considering 723 opportunities during the same period, which underscores the determination we bring to investment selection. Saying no can often be the harder call. Capital still has to be put to work to generate returns, and the pressure to transact-from investors, from a market so eager to declare recovery, and even from the calendar itself-is real. However, this discipline is what drives results.

When it comes to investment selection, we believe in quality over quantity and capital preservation over speculative growth. It is why AWH is built as a vertically integrated platform, with investment, operations, and development under one roof. Every acquisition is underwritten by people who also know how to run the asset, not just model it. We meticulously review potential deals, knowing all the right circumstances must line up for us to commit capital. Our human acumen, based on our decades of combined experience and hard-earned lessons across multiple market cycles, is essential to our decision-making process. While we utilize AWH MIDAS™, our proprietary intelligence platform, to aid in canvassing, gathering and organizing research, the AWH Acquisitions Team adheres to a rigorous and consistent process to examine the basic conditions (e.g., RevPar, market penetration and margins), search for any anomalies, and compare it against our purpose-built models. While we often have passionate debate, ultimately, the firm's investment committee, led by the firm's three co-founders, make the final decision, layering in experience with extensive analysis to achieve maintaining the highest investment selection standards.

AWH strives to find and make deals others don't anticipate. AWH MIDAS™, built on more than a decade of proprietary hospitality data across more than 600 operating regions, enables the firm to selectively focus on outstanding markets with good histories and outlooks that are analyzed in the context of their peers, i.e., other excellent markets. That means even our initial analysis is scrupulous and consistent, which brings a huge amount of discipline to the process.

"Our process has improved dramatically to avoid the situations where we spend a lot of time, energy and money, with everyone getting excited, and then a deal does not happen because we found insurmountable issues," said Cooley. "If there's something that can be addressed through price, at times these can be resolved through a conversation with the seller. But occasionally, a deal cannot be struck, or is just permanently flawed, and we have to - despite all the time and money - walk away. Those are tough, but that rigor is essential to avoiding getting into real problems later. But the earlier we identify these issues - now often at the desktop underwriting stage - the more time we can spend on the truly special and actionable opportunities that are going to perform at the top of their respective markets, and, ultimately, as top-performing investments for AWH and our investors."