We call that a totally lease-oriented asset that traded for — Troy, what was the cap rate that we looked at?
Troy Furbay: Yes, it was about 60 cap rate.
Mark Brugger: Yes. So on trailing cash flow, pretty stabilized asset at a 6 cap. — and it’s relatively independent or unencumbered leisure-oriented asset in Nashville. So there’s not a lot of data points out there. And so I think if we told you it was 3% less, that would just be a guess, but we still think there’s robust demand for these kind of assets.
Gregory Miller: You provided some data points, I appreciate that and thanks for the commentary. For the follow-up question, I thought you asked specifically about the Dagny, a little more depth on the outlook that you provided through 2027. Could you walk us through the bridge and how you get to $17 million of EBITDA in 2027 versus $9 million this year? And how much of the underwriting is driven by operating expense reductions relative to top line gains.
Jeffrey Donnelly: Yes, Greg, this is Jeff Donnelly. I mean I can take you through a little bit of it. I mean, a good chunk of it that’s going from this year to into next year is going to be the elimination of some of the — obviously, some of the disruption that you have from the conversion. So there’s a few million dollars that, as Mark mentioned, about $3.5 million of EBITDA, I think as we go in the next year, that’s going to be a big chunk of that. And then I think there’s going to be some cost savings effectively that come with removing the overhead that comes from being a branded asset and effectively enhances profitability because we’re able to bring more of that revenue down to the bottom line being an independent versus a branded operator.
And then I think the final leg of it is going to be just how we position that asset and how are we better positioned across both the leisure and business transient channels in that market that we can effectively gain share in that marketplace. I think to add more details, right? As an asset, I think we’re projecting $35 million of gross revenue this year; ’19 revenues were at $43 million. So just simply the return back to ’19 peak as with a renovated rebranded asset represents a significant amount of the — what we’re calling potential upside. In general, the brand costs on an asset like this, given that it’s all rooms revenue driven between franchise fee and precoat program, we’re over 10%. So our $40 million rooms revenue asset, just operating as an independent represents about $4 million of up brand costs that we save.
So I think that’s really the bridge. The combination of return to prior peak revenues and under a more efficient cost structure, we should be able to drop to at least that at the bottom line.
Gregory Miller: That’s all very helpful. Thank you very much.
Operator: Thank you. One moment, please. Our next question comes from the line of Smedes Rose of Citi. Your line is open.
Smedes Rose: Hi, thanks. I just wanted to ask you, you mentioned that group business in Chicago is slowing or slower in the second half. I was wondering, is that in line with what you were expecting already? Or has that changed from your last update? And then I’m just wondering, on group in general, if you could just talk a little bit about what you’re seeing in terms of kind of composition. Is it more corporate? Is it just associations coming back that’s helping the citywide calendars or kind of just a little more color around the tenor of group, I guess.
Mark Brugger: Sure. So in Chicago, in particular, it’s driven very much by the citywide layout. And the way the calendar was in 2023 is it’s just — it’s way or the more citywides were focused in the first two quarters of the year. So this is as we expected. And frankly, 2024 looks terrific in Chicago and our bookings in 2024 in Chicago are very strong. So we’re excited about the prospects. So this is just seasonality and kind of what we expected from the citywides. And a number of our markets, as I mentioned in the prepared remarks, Q4, back half of the year and particularly Q4 looked to.
Smedes Rose: [Technical Difficulty]. Just wondering kind of what you do pragmatically to kind of keep sort of short-term disruption to a minimum.
