What's the deal? Stephen Wendell of Mountain Shore Properties - Developing Hotel Genevieve in Louisville, KY

How did you get started in Commercial Real Estate?

My father, Charlie Wendell, invested in his first hotel in West Virginia the year I was born, so you can say I have been in the industry since day one. As a kid, I got to see my dad’s dedication and passion every day. I helped around the hotels, learning the management and service side of the business as well as development.

My career began at Proskauer, a prominent law firm in New York City. During the economic downturn, I was assigned to Philadelphia to work with the Eagles. This led me to delve into real estate opportunities in Philly. We acquired a three-unit mixed-use property on South Street and constructed a new house on the rear of the property.

By 2012, I really wanted to collaborate with my dad. I proposed venturing into (1) new non-hotel real estate projects like the first project we did in Philadelphia and (2) developing select-service hotels (e.g., Hampton Inns) in burgeoning college towns and regions. Being born in West Virginia but growing up in South Carolina, I decided to name the entity Mountain Shore Properties. My college friend and teammate, Ryan Reich, co-founded the new entity alongside my father. Our primary focus of development before the pandemic was select-service hotels, and we capitalized each project on a deal-by-deal basis. The pandemic led us to shift our thesis slightly.

We divested a significant hotel property in Nashville to a real estate hotel fund in Atlanta in March 2020. The timing was unbelievable and gave us the space to reevaluate our full portfolio. We established a $75 million real estate fund in the first quarter of 2021, which gave us the capital to execute real estate transactions as the capital markets tightened.

What about Louisville stood out to you as an ideal spot for Hotel Genevieve?

Mountain Shore Properties is headquartered on the East Coast and we operate a real estate company that focuses on the eastern region of the country. Louisville had captured my attention for some time, and I finally visited the city in 2019. I frequently go on two to three-day trips to submarkets that we find intriguing, and this one left me very intrigued.

The emergence of Nulu (New Louisville), a growing neighborhood with shops, restaurants, and now hotels, coupled with solid fundamentals and year-round tourism, was a clear recipe for success. Louisville has the Kentucky Derby, Churchill Downs, and significant bourbon tourism. Additionally, the city had recently undergone a major renovation of its Convention Center, a crucial factor for hotel demand.

We had strong conviction for Louisville at this point and soon after identified a property in the heart of Nulu owned by the founders of Rabbit Hole Distillery who were looking to redevelop it or partner with a developer like us.

Can you highlight any key partners or collaborators on the deal?

Kaveh Zamanian, the founder of Rabbit Hole, is an incredible entrepreneur who established the brand and subsequently exited. He has made substantial investments in Louisville, particularly in the Nulu area. Kaveh and some of his partners contributed the land for equity in the project, while our equity partners provided cash to finance the deal.

Situated next door, the distillery is a state-of-the-art facility. Collaborating with such reputable individuals enhances our credibility and streamlines our operations.

How was the name Hotel Genevieve chosen?

The hotel’s name was the result of extensive research on the area. Local creative studio Zimmer-Design was instrumental in arriving at Hotel Genevieve. Saint Genevieve is a regional limestone, a key ingredient in bourbon production and the patron saint of Paris. The name celebrates the French origins of Louisville and the many women that worked to bring the hotel to life.

What type of financing is in place for Hotel Genevieve?

Our Fund, which closed in 2021, raised the capital for this opportunity zone deal. On the debt side, United Bank served as our lending partner. Mountain Shore has a longstanding relationship with their executives, and they were enthusiastic about financing Hotel Genevieve.

What excites you most about Hyatt’s acquisition of Standard and its subsidiary brands?

Mountain Shore has worked on numerous Hyatt properties and knows the company well. The allure of the brand stemmed from its creative team, known for unconventional thinking and deep immersion with the neighborhoods of each location. Hyatt’s infrastructure and support bring added strength to this project.

What advice can you offer to young professionals seeking their first development deal?

Practical engagement in the field is invaluable. Learn from failure and know the intricacies of each deal. I believe in starting small and pursuing a manageable first project. Immersion in the entire development process allows for a comprehensive understanding.