Denihan’s New President Aims to Double Portfolio
Q&A with David Duncan
As the new president of 50-year-old Denihan Hospitality Group, David Duncan is the first non-family member in such a top leadership position. He joined the company as CFO in 2003 and has grown into the newly created position. There, he reports to Denihan co-CEOs and owners, Brooke Denihan Barrett and Patrick Denihan.
Duncan is charged with helping the company double its 13-hotel portfolio in the next three to five years.
“David’s banking and real estate leadership has been instrumental in completing several significant company transactions and providing us with a vehicle for growth,” says Patrick Denihan. “He will continue to guide and execute our growth plans as well as direct our operation platform.”
Duncan recently chatted about those growth plans.
Tell me about Denihan Hospitality.
We are privately held, owner, operator and developer of boutique hotels focusing on the top 10 urban markets throughout the U.S. We do that through three brand solutions. The Affinia hotel solution, The James Hotel solution and a collection of luxury independents including The Surrey and The Benjamin in New York City.
We’re a real estate investment company and hotel operator under the same umbrella. We built this company for our own account and now we’re looking to do it with third-party partners going forward.
Under your leadership the company is planning considerable growth. What does that mean?
Growth is about growing equity in real estate and thoughtfully deploying our brand. We think we can do it thoughtfully and responsibly with institutional partners doing two or three deals a year.
Our growth plan is to really replicate what we’ve been doing in New York City in the top urban markets in the U.S. We plan to identify assets in key markets with 200 to 500 keys where we can use our hotel-operating platform, which we built from the ground up over decades, to launch and operate boutique hotels.
You already have hotels in New York City, Chicago and Washington, D.C. What other markets are you looking at?
We’d like to add to our existing markets and expand elsewhere. Boston, Miami, Los Angeles, San Francisco, San Diego, Portland, Seattle and Denver.
How is your ownership structured right now?
We have hotels that we own 100%, some in joint venture partnerships with institutional investors and some managed on a third-party basis for other partners. Our preference is to own a significant part of the equity in what we manage.
We have various institutional partners, including some of the most recognized, LaSalle Hotel Properties and Pebblebrook Hotel Trust. Last year we entered into a joint venture with Pebblebrook. It acquired a 49% share in six of our assets in New York. That basically freed up equity capital for future acquisitions.
How will you fund your growth?
Last year, as a result of the Pebblebrook deal, we freed up over $100 million worth of capital that we will use in our growth strategy. Coupled with institutional capital, that’s a sizable number depending on how we want to partner.
We’re interested in institutional capital partners who are interested in co-investing with us and institutional owners who’d like us to manage their portfolio. I would expect we would be selective about institutional portfolios. We want to stick to well- located boutique hotels in urban markets.
How do your brands work?
We’ve purpose built these brands to match different opportunities. The Affinia brand — currently seven properties — is more an adaptive reuse. The James brand is a more targeted brand focusing on luxury position. We use the tagline “luxury liberated” to convey that it’s a brand centered on art and lifestyle.
What’s first on your radar?
We will be opening The James South Beach in the fourth quarter this year. We are adding three new assets to our portfolio as we speak.
We’re opening a West Coast development office in April in San Francisco, but working in all urban markets there to identify assets.
How did you get involved in hotel business?
I have spent my life in real estate and always greatly enjoyed the hotel business. It has that wonderful combination of real estate investments paired with an operating company, wherein, if it’s done well and brands are created well you can really make unique real estate returns.
I’m really excited to be a part of Denihan at this time in the market. It’s a really great platform and brand with 50 years of experience to build on. While I’ve been appointed the one voice, I have a great team and really great tools to work with. I’m really looking forward to the next months and years.
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