Most people assume the person running a big deal is the one funding it. Evens Charles believed that for years, and it kept his deals small until his third hotel.
He grew up in a single-parent household in Washington, DC, and has no formal training in finance or real estate. His first deal was a $32,000 row home in West Philadelphia, bought with 90% financing and $1,000 of his own money while he earned about $21,000 a year. That deal yielded a $25K return, and he kept working while he built. Later, in sales, he lived on the same budget and put every bonus into real estate, until he had 40 to 50 residential properties.
The move into hotels came from a book and a flyer. He read Don Peebles on owning hotels, saw a meeting notice for a Black hotel owners' association two weeks out, and flew to Atlanta. At that one conference he met the partner, the SBA lender, the construction contact and the franchisors for his first hotel, a $3 million, 70-room property financed 80% through the SBA.
The deals grew from there, funded first by friends and family and then by family offices and private equity. Today he is the Founder and Managing Principal of Frontier Development & Hospitality Group, which has built a $350M hotel portfolio of Hilton- and Marriott-branded hotels across 7 states and has a $1.1B development pipeline, run by a team of fewer than ten people. In his telling, his last $70 million deal took the same effort as his first $3 million one.
He is plain about the risk. Hotels are a 24-hour operating business, lenders and brands want to see real net worth and liquidity from a sponsor, and COVID hit hotels harder than any other kind of real estate. He came through it disciplined on leverage, narrowed his focus to the hotels that held up, and moved into mixed-use deals.
Three takeaways from the conversation
The person running a deal rarely funds all of it
Evens describes the structure on a $40 million hotel: roughly 60% debt, and a $10 million equity check in which a limited partner puts up $9 million and the sponsor puts up $1 million. The sponsor earns that position by finding the deal, running it, and putting a reputation behind it. He says he now puts in less of his own capital per deal than he did on his smaller ones.
A strong brand brings customers you would otherwise have to find
A hotel leases by the day, so its rates can change every night, and Evens points to the brand as the other lever. A major brand's reservation system and loyalty program can send 35 to 40 percent of a hotel's business, so his strategy became buying hotels with weaker brands, renovating them to qualify for premium ones, and watching the same building earn far more.
Borrow a track record before you have your own
Evens grew slowly, one small deal at a time, and he says he would not recommend it. His first hotel happened because a partner from a hotel-owning family came in, since lenders will not back a sponsor with no hotel experience. His advice is to bring in partners with a track record early, even if it means giving up some of the economics, because that is how your own record gets built.
Watch the full conversation
About this guest
Evens Charles is the Founder and Managing Principal of Frontier Development & Hospitality Group, which has built a $350M hotel portfolio of Hilton- and Marriott-branded hotels across 7 states and has a $1.1B development pipeline. He started in real estate with a single row home deal, a $1,000 out-of-pocket investment that yielded a $25K return, before building a residential portfolio and moving into branded hotels.
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