Why was Icon Hospitality Services (IHS) created?
Icon Hospitality Services (IHS) was formed in August 2006 to link private equity with hotel assets that produce positive cash flows and appreciate in value. We seek to acquire full-service, select-service and extended-stay hotels through organic development, purchase, or joint ventures. IHS ensures a balanced scorecard approach is employed to drive profit and fuel future growth. IHS is actively seeking investors in order to pursue acquisitions.

Will you be required to invest in every IHS lodging LLC?

No. IHS will invite you to consider individual investment opportunities as they arise unless you prefer that we not do so. If you tell us not to call, we won’t.

How can you participate in ownership of IHS hotel(s)?
IHS offers investors the opportunity to participate in ownership of IHS hotels on a case-by-case basis. Each hotel is owned by a limited liability company (LLC) created for the sole purpose of owning that particular hotel. IHS hotels are asset-managed by the company's highly experienced founder, who has built a successful lodging career with premiere companies in Washington, DC and abroad. His lodging experience totals more than thirty years.

Who is the Managing Member and what is his role?
The company's founder serves as managing member and owns 20% of each LLC through a "promoted interest." The managing member sources and qualifies each deal, prepares the Letter of Intent, negotiates the detailed Sales and Purchase Contract, conducts Due Diligence, funds Earnest Money Deposits, secures qualified investors, arranges the equity and debt, as well as selects and supervises the management company. The managing member may also invest in an individual project as an investor member, thus owning a pro rata portion of a particular deal in addition to the previously described promoted interest. At the discretion of the managing member, selected individuals may receive one-time only or periodic payments in either a flat sum or as a percentage of the managing member's share of an individual LLC.

Who are the Investor Members and what is their role?
Investor members invest 100% of an individual project's equity and own 80% of the project. Investor members are typically high-net-worth individuals who are interested in investing in real estate without the responsibility of actually managing the property. Investor members have a long term investment horizon of 5-10 years, the timeframe which typically transpires before an LLC is dissolved and a property is sold.

How do Investor Members receive a return on their investment?
Investor members receive a cumulative preferred annual return of 10% on their investment starting from the time their money is transferred to the LLC. This means that in any given year investor members receive the preferred return on their equity investment first, after which the balance of available cash is distributed on an 80%/20% pro-rata basis to the investor members and the managing member. The preferred return varies for each hotel, but generally it’s expected that investor returns will increase year-over-year as operating results improve beginning in the stabilized year. If investor members fail to receive their preferred return for any year, the shortfall is accrued. Upon the sale or refinancing of a hotel, investor members receive any accrued preferred return first, then their original equity, with any remaining balance split on a 80%/20% pro rata basis between the investor members and the managing member.

What is the minimum investment in an IHS LLC?
Each LLC consists of membership units currently established at $200,000 each. The minimum investment in each LLC is one membership unit.  For IHS planning purposes, a signed commitment to fund "qualifies" one for participation in a given LLC, with actual funding required in sufficient time to ensure we can close. Generally speaking, funding will be required three weeks prior to a scheduled closing date. (Please note: member funds are not used to support administrative or corporate activities at Icon Hospitality Services.)

What is the typical investment term?
As noted above, participation is an IHS LLC typically involves an investment horizon of 5-10 years. At the end of the term, the property is sold, the LLC is dissolved, and the remaining capital and proceeds are distributed to the members. An “early exit” might occur if the total membership or individual members were prepared to buy you out should you desire to exit prior to sale of the hotel.

What are Member Distributions and when are they paid?
Profits in the form of Member Distributions are sent periodically to members. These distributions are ordinary income for federal income tax purposes, and individual members are responsible for paying income tax on these distributions.  An annual K1 will be generated to capture and report any tax related savings and or distributions.

Are there downside financial scenarios you should consider?
Yes. As with any investment, it's important to understand the possibility of a downside scenario. Though I do not foresee this happening, a cash call to investors due to insufficient operating cash flow could occur in order to keep the operation stable.

Will investing in an IHS-managed lodging LLC make sense for you?
Each individual must carefully evaluate his or her own situation. Most financial advisors, of course, recommend a diversified portfolio. Such a portfolio might include ownership of commercial real estate, which can be achieved through investments such as an IHS-managed lodging LLC. If commercial real estate ownership makes sense as an investment alternative given your personal investment portfolio and preferences, then IHS-managed lodging LLC’s might be worth a closer look.

How will IHS keep you informed about your investment?
Communication will occur primarily through Quarterly Membership Reports. In addition, the founder of IHS, acting as Managing Member for IHS-managed LLC’s, will make himself available for consultation regarding your investment.

Who is the IHS founder and what is his background?
The founder’s bio is found under the CEO tab on this web site, providing a summary of his diverse experience, which totals thirty-plus years of success in the lodging industry.

What qualifies the founder to manage your lodging investment(s)?
His extensive industry experience and successful past performances in a wide range of corporate and hotel-level assignments, including large and small organizations, the management of branded and independent full-service, select-service and extended-stay hotels, and significant experience interacting with a variety of ownership structures, including institution-based, limited partnerships, and high-net-worth individuals. He regularly seeks and accepts counsel from a highly qualified Board of Advisors.

Who will be invited to invest in IHS hotels?
Friends, family members, acquaintances in the industry, and high-net-worth individuals.

Can you recommend an investor to IHS?
Yes, of course, and I hope that you will.

Who decides whether IHS targets a hotel for acquisition?
The founder, acting as Managing Member for IHS-managed assets, determines whether a hotel is an acquisition target and invites individual investors to participate in an LLC created for the purpose of owning that hotel. Hotels will typically be “targeted” or found through a variety of brokers, referrals, and unsolicited offers. I am currently evaluating a number of hotels, and always have an active investment pipeline.

How will IHS acquisitions be financed?
Acquisitions will be financed via sources with whom the founder has established general business and banking relationships.

If you have questions, what should you do?
Please email Larry Guest at glarrya@cs.com or call him at (240)-498-3218.