TownePlace Suites Houston Northwest/Beltway 8

THM FIT Score Analysis & Investment Thesis

H089
Address 8845 West Rd, Houston, TX 77064
Keys 92 Extended-Stay Suites
Brand Marriott (TownePlace Suites)
Analysis Date January 21, 2026
88 / 100
A
THM FIT Grade
VERY HIGH
Investment Conviction
⭐ Margin Gap / Value-Add
18 / 30
ADR & Revenue Capacity
22 / 25
RGI Assessment
13 / 15
PIP Exposure
15 / 15
Property Type Fit
10 / 10
Strategic Value
10 / 10

Pass/Fail Gates - All Passed

✓
Market
Houston - Northwest
✓
Brand
Marriott
✓
Size
92 Keys (Extended Stay)
Pricing Guidance
$9.25M
THM Target Price
$8.8M
$95K
Per Key
10.7%
Cap Rate (TTM NOI)
11.9%
Cap Rate (Stabilized)

⭐ Cost Control Opportunity Assessment

Rating: C

THM's competitive edge is operational excellence. This property already operates near target margins — limited cost control upside but strong fundamentals.

Expense Category Current % THM Target % Gap Est. Savings
NOI Margin 36.3% 40% +3.7 pts —
Labor (% Rev) ~26% 24-26% 0-2 pts $0-52K
Utilities & Energy ~5% 4-5% 0-1 pt $0-26K
Contract Services ~4% 3-5% 0-1 pts $0-26K
TOTAL ANNUAL SAVINGS POTENTIAL $50-100K
Assessment: Current 36.3% NOI margin is already near THM target (40%). This is a well-operated property with limited cost control opportunity. Value comes from stable cash flow, strong rate integrity (ARI 110.2%), and minimal PIP rather than operational turnaround.

TTM August 2025 Performance

Total Revenue $2.59M
Occupancy 70.5%
ADR $109.36
RevPAR $77.13
Room Revenue $2.59M
NOI $940,580 (36.3%)
RevPAR Growth YoY +4.6%

2024 Financial Performance

Total Revenue $2.48M
Occupancy 71.6%
ADR $103.09
RevPAR $73.77
GOP $1.17M (47.2%)
NOI $809,660 (32.6%)
NOI Margin Improvement +3.7 pts YoY

PIP Summary

Year Built 2021 (4 years old)
Prototype Gen 4 Marriott
PIP Status Minimal Required
Estimated Cost < $5K/key
Total Investment $0-460K
Physical Condition Excellent
Franchise Term Long Runway

SBA 504 Loan Structure

Total Project Cost $9.21M
LTC 85%
Loan / Equity $7.83M / $1.38M (15%)
Term / Blended Rate 25 Years @ 6.00%
Annual Debt Service $605K
TTM STABILIZED
NOI $941K $1.04M
DSCR 1.55x 1.72x
Debt Yield 12.0% 13.3%
Cash-on-Cash 24.4% 31.5%

Competitive Position (STR Dec 2024)

ARI (Rate Index) 110.2%
MPI (Occupancy Index) 74.3%
RGI (RevPAR Index) 81.9%
YTD RGI 120.3%
THM Index Priority: ARI (rate integrity) is primary indicator. Strong ARI 110.2% shows pricing power. RGI 81.9% is acceptable for THM cost-focused approach.

Key Demand Drivers

Apple AI Server Facility
Methodist Willowbrook Hospital
Kindred Hospital NW
Siemens Houston
General Electric
NOV Inc.
Willowbrook Mall
Sam Houston Race Park

Apple AI Server Manufacturing Facility

8702 Fairbanks Road, Houston TX — 1.5 miles from subject

NOW OPERATIONAL
$500B+
Apple U.S. Investment
1M SF
Foxconn Campus
1,400+
Direct + Indirect Jobs
$920M
Regional Economic Impact

Why This Matters: Apple's AI server facility (operated by Foxconn) began shipping American-made servers in October 2025 — months ahead of schedule. The 1M SF campus at 8702 Fairbanks Road is 1.5 miles from the subject property, making TownePlace Suites one of the closest extended-stay options for Apple/Foxconn contractors, technicians, and visiting personnel. Extended-stay hotels with full kitchens are the preferred lodging for long-term project workers. This facility is part of Apple's $600B commitment to U.S. manufacturing and will create thousands of jobs.

TPS Advantage: Full kitchens for long-term stays
Proximity: Closest Marriott extended-stay
Status: Already shipping AI servers

5-Year Apple Impact Projection

TPS is positioned to capture significant demand from Apple/Foxconn's 1M SF facility 1.5 miles away. Conservative projections based on facility ramp-up and regional economic impact.

Metric Current (TTM) Year 1 Year 3 Year 5
Occupancy 67.2% 72-75% 78-82% 82-88%
ADR $114.72 $118-122 $128-135 $140-150
RevPAR $77.13 $85-92 $100-110 $120-130
Room Revenue $2.59M $2.85-3.1M $3.35-3.7M $4.0-4.4M
NOI (@ 40% margin) $940K $1.1-1.2M $1.3-1.5M $1.6-1.8M
Cap Rate on $8.8M 10.7% 12.5-13.6% 14.8-17.0% 18.2-20.5%
Value Creation Thesis: At $8.8M LOI price, you're buying before the market prices in Apple. Year 5 NOI of $1.6-1.8M implies an 18-20%+ cap rate on basis. Even modest Apple capture (5-10% of contractor demand) drives occupancy to 80%+. TPS's full kitchens make it the natural choice for 30+ day project workers.

STAR Report & Compset Analysis

Current compset assessment. Subject property outperforms on rate (ARI 110.2%) — recommend removing Comfort Suites (wrong segment).

Hotel Dist. Type RevPAR Index Status
TownePlace Suites Houston NW (SUBJECT) — Extended Stay $77.13 100.0 Subject
Homewood Suites by Hilton Houston NW at Beltway 8 0.2 mi Extended Stay $89.58 86.1 Keep
Holiday Inn Express & Suites Houston NW Beltway 8 0.2 mi Select Service $62.94 122.5 Keep
La Quinta Inn & Suites Houston NW Beltway 8 0.3 mi Select Service $50.27 153.4 Keep
Comfort Suites Northwest Houston @ Beltway 8 0.8 mi Midscale Suite $33.58 229.7 Keep
Staybridge Suites Houston Willowbrook 1.1 mi Extended Stay $45.04 171.3 Keep
Fairfield Inn & Suites Houston NW/Willowbrook 1.1 mi Select Service $60.45 127.6 Keep
Residence Inn Houston NW/Willowbrook 1.9 mi Extended Stay $76.85 100.4 ADD
Home2 Suites Houston Willowbrook 2.2 mi Extended Stay $75.43 102.3 ADD
SpringHill Suites Houston NW (Chasewood Park) 2.8 mi Select Service $75.85 101.7 DON'T ADD
Key Insight: Subject property shows strong rate integrity (ARI 110.2%) but below fair-share occupancy (MPI 74.3%). STR compset includes 6 hotels (562 rooms). Recommend adding 2 extended-stay competitors (Residence Inn, Home2) within 2.2 mi for complete market view. SpringHill at 2.8 mi is too far to add. Index above 100 indicates subject outperforms the competitor on RevPAR.
Legend: Subject Recommend ADD Don't Add Keep in Compset

Investment Thesis

Executive Summary

TownePlace Suites Houston Northwest represents a stable, low-risk acquisition with exceptional upside potential at $8.8M target price ($96K/key). This 4-year-old Gen 4 Marriott extended-stay property offers exceptional rate integrity (ARI 110.2%) and near-target NOI margin (36.3%) with minimal PIP exposure. At a 10.7% going-in cap rate on TTM NOI ($940K), the property provides strong immediate cash flow. Critical differentiator: Apple/Foxconn's $500B AI server manufacturing facility at 8702 Fairbanks Road is just 1.5 miles away and already operational — TPS is one of the closest extended-stay hotels to this 1M SF campus creating 1,400+ jobs.

1

Exceptional Rate Integrity (ARI 110.2%)

Subject commands 10% premium vs. compset on ADR, demonstrating strong pricing power. Rate has grown from $99.25 (2024) to $109.36 (TTM) — 10%+ growth while maintaining occupancy.

2

Near-Target Margin (36.3% NOI)

Current 36.3% NOI margin is already near THM's 40% target. This is a well-operated property with limited but achievable upside ($50-100K annually). Lower risk profile than distressed turnaround plays.

3

Minimal PIP Exposure

Built 2021 on Gen 4 Marriott prototype — property is in excellent physical condition. Estimated PIP <$5K/key vs. $10-15K typical for older assets. This preserves capital and reduces execution risk.

4

Apple AI Facility — 1.5 Miles Away, Already Operational

Apple/Foxconn's 1M SF AI server manufacturing campus at 8702 Fairbanks Road began shipping in October 2025. At just 1.5 miles, TPS is one of the closest extended-stay hotels. $920M regional economic impact with 1,400+ jobs creates sustained demand for project workers needing full-kitchen accommodations.

5

Attractive Basis Below Replacement

At $8.8M ($96K/key), acquisition is ~45% below replacement cost (~$175K/key). Strong downside protection even in adverse market conditions.

6

Strong Levered Returns

With SBA 504 financing (85% LTC, 6% blended rate), projected cash-on-cash of 24.4% TTM and 31.5% stabilized on $1.38M equity investment.

Key Risks & Mitigants

Risk Mitigant
Below fair share occupancy (MPI 74.3%) Strong ARI (110.2%) indicates pricing power maintained; THM prioritizes rate integrity over volume; occupancy gap is upside opportunity not core thesis
Limited margin improvement opportunity 36.3% margin already near target reduces risk; stable cash flow more valuable than speculative turnaround; Apple catalyst provides growth path
Competition from 125-key Homewood Suites Subject outperforms on RevPAR ($77 vs $72); TownePlace serves different guest profile; newer Gen 4 product
Apple facility dependency Facility already operational (Oct 2025); deal underwritten on current performance; Apple demand is upside, not base case

Recommendation

LOI ACCEPTED AT $8.8M ✓

Indicative Investment Metrics (at $8.8M)

$95K
Price/Key
10.7%
Going-In Cap (TTM)
11.9%
Stabilized Cap (40% margin)
$9.0-9.2M
Total Investment (incl. PIP)
24.4%
Cash-on-Cash (TTM)

Value-Add Opportunity Analysis

Metric Current (TTM) Target (Stabilized) Upside
Total Revenue $2.59M $2.59M —
NOI Margin 36.3% 40% +3.7 pts
Annual NOI $940,580 $1,036,000 +$96K
Cap Rate (on $8.8M) 10.7% 11.9% +1.2 pts
Operational Thesis: This is a stabilized asset with exceptional location advantage. Current 36.3% margin is near target 40%. Value comes from strong rate integrity, minimal PIP, and proximity to Apple/Foxconn AI facility (1.5 mi, already operational). TPS's full kitchens make it ideal for the long-term project workers Apple's 1M SF campus will generate.

Investment Conviction Factors (at $8.8M) — THM Value-Add Approach

Factor Threshold H089 Value Status
ARI (Rate Integrity) >100 110.2% EXCELLENT ✓
Cap Rate >8% 10.7% (TTM Aug 2025) YES ✓
Basis/Key <$100K $96K/key YES ✓
Minimal PIP <$10K/key <$5K/key (2021 build) EXCELLENT ✓
Current Margin Near 40% target 36.3% GOOD ✓
RGI (Revenue Index) 85-105 preferred 81.9% ACCEPTABLE ✓
Conviction Factors Met: 6 of 6 — Strong THM fit with exceptional location advantage. Rate integrity (ARI 110.2%), near-target margin (36.3%), minimal PIP. Key differentiator: Apple/Foxconn AI facility 1.5 miles away is already operational — TPS is closest Marriott extended-stay to a $920M economic impact generator.

Analysis prepared using THM Deal Analysis System scoring criteria (Updated Methodology Jan 2026)

Source Documents: CBRE Offering Memorandum (2025), TTM Financials through Aug 2025, STR Reports through Dec 2024

LOI Price: $8.8M | Original Guidance: $9.25M (January 2026)