When in Doubt, Endow
Updated: Nov 9
Or, said differently, give and you shall receive.
Lately, as we have been raising the final 20% of capital (as previously described), our mindset has been oriented around “receiving” the final funding. With entitlements, permits and blueprints in tow, we are ready to start construction!
Unfortunately, the capital markets have been quite challenging. Institutional investors focused on hospitality development typically own a portfolio of hotels and resorts. The rising rate environment causes a problem because it’s impossible for sellers and buyers to agree on a valuation (i.e., cap rate) until interest rates stabilize.
In addition, institutional investors are struggling with $40B in forthcoming hospitality mortgages expiring over the next three years. Recognizing that that many of these are adjustable-rate mortgages established at much lower levels (3-10 years ago), capital calls are likely forthcoming. Both of these factors are severely hampering their "dry powder" and, according to our broker Piper Sandler, creating the worst environment for new resort construction since at least the tech bubble.
For our team, this project has certainly reinforced the notion that "for every dark cloud, there is a silver lining!" Our focus on leveraging Simply Shenandoah for broad social impact – as described in our fundraising video and in the way we structured our operating company as a Public Benefit LLC – has recently created an opportunity to shift from "receiving" to "giving" in the form of an innovative capital structure that blends private, public, and non-profit capital.
We are doing this by creating an Endowment for Healing Humanity through a 501(c)3 called Simply Transform. This endowment will focus on populations dealing with workplace trauma (e.g., veterans, first responders, ER nurses), intergenerational trauma (particularly in BIPOC communities), and family trauma (e.g., cancer, motherhood, childhood/sexual abuse).
By integrating Simply Transform alongside our for-profit investors, we are able to deliver superior returns versus other endowment models by providing an outcome-based, 10% return of in-kind services in perpetuity (e.g., a $5M endowment provides 1000 guest nights of transformational experience annually). Leveraging partnerships with globally recognized research institutions, non-profits, and indigenous organizations, we will integrate proven transformational science with holistic wellness wisdom to specifically serve these populations.
We are excited to be in a due diligence process with several pioneering thought-leaders who believe transformational wellness can be a tool for broader social impact. While this is taking longer than a more traditional route, we believe it allows us to maximize our mission and how we serve our customers, investors, partners, and the community.
Thank you for your belief in our mission, your support, and ... your patience!