As a kid, Kendra Plummer dreamed of owning a boutique hotel. As she grew, she realized that hotels are more than just bricks and mortar. “Hotels are a real estate asset class, and they are very much an investment.”

Today, Kendra is the founder and CEO of Elise Capital. She helps all communities – especially those that are underrepresented in finance and capital allocation – unlock the hidden potential of hotel investments. 

With McGuireWoods attorneys PJ Harris and Dan Howell, she outlines her path, from studying hotel management as an undergraduate to earning her MBA to launching Elise Capital, a firm dedicated to developing savvy hotel investors and educating a pipeline of potential investors. She reveals lessons she’s learned on her journey and how Elise Capital guides investors on theirs.

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This is Accessing the Pipeline, a podcast for black professionals in private equity and finance brought to you by McGuireWoods. Each episode features special guests offering insights into accessing capital, developing and expanding relationships, opportunities, and driving growth for black owned businesses. Tune in to access the possibilities.

Hello, and welcome to Accessing the Pipeline, my name is PJ Harris, and I'm an M and A and corporate associate here at McGuireWoods. Please join me and McGuireWoods partner Dan Howell in welcoming our guest Kendra Plummer, Elise Capital.

It's a pleasure to be here with Kendra Plummer to discuss Elise Capital.

All right, well, thank you for being here, Kendra.

Thank you.

Let's get started by talking about your background and what led you to starting your own real estate investment firm and perhaps more specifically investing in hotels?

Right. So for me, I'm a little bit of a different kind of story because I have always wanted to be in the hotel space, hotels have been my entire career. I went to undergrad specifically for a hotel management program, and the difference here is that since I was a kid, my goal was hotel ownership, I wanted to own a boutique hotel. What I didn't realize is the pathway to get there, so I went to school for hotel management with the impression that the general manager is the owner of the hotel and that's all it takes, is that all you have to know is how to run it and you own it.

And it was not as simple as that, I've worked in hotel operations, I ended up going back to school for my MBA to focus on real estate and finance, finally realizing that hotels are a real estate asset class and they are very much an investment. That is how I got into launching Elise Capital and the structure that it is as a hotel investment firm.

That's awesome, and congratulations to you for maintaining the through line of your childhood ambition and realizing it, that's pretty impressive.

Yeah, it's not every day we talk to someone who is doing what they wanted to do when they were a kid, so that's cool.

Absolutely. And we're also always impressed by the courage and industrious of young emerging managers like yourself. So can you share an example of an early success that indicated that you were on the right path towards your dream of hotel ownership? We noted that you've been recognized by IHC's Laurie Raleigh Award for emerging excellence in hospitality consulting, for instance?

Yeah, so it's hard to point just to one success because hotels are a very tricky asset. So although there's some successes along the way, there are also a lot of pain points and I just have to be reminded of why I want to be doing this and that why is for inclusion in the hotel space and that it's a great industry to be a part of. But I would say some of my early successes was probably working for those private equity or investment groups and getting our first deal done. I would say that that success allowed me to see how the deals are structured, how they work and say, I can do this.

But to be honest, in my first deal, although I was going through the motion in the process, I did not feel like I could do it the majority of the time. There's so many steps in between putting in that letter of intent to actually closing, and right now deal closing times are a four to six month process, so there's so many little things along the way that could have the deal not work. Even though I had those successes with prior companies, it wasn't until the deal actually closed that I was like, yes, I can do this.

That's awesome. And I'm going to actually turn it over to Dan in a second to dive a bit more into the mechanics and the landscape of fundraising and talk a little bit more about your strategy specifics. But before we do, I was just curious, what is the impetus behind the name Elise Capital? Is there a story behind how you chose that for your fund's name?

Elise means God's promises, which launching an investment firm on your own is definitely a faith and purpose journey. But it is also both my middle name and my grandmother's middle name, so more homage to my family as well.

That's phenomenal.

Well, we wanted to go a little bit more in depth about Elise, and maybe you could explain to us a little bit about your mission statement and your investment strategy?

The mission of Elise Capital is to unlock wealth generating hotel investment opportunities to all communities. So what we mean by that is, we are an inclusive investment firm instead of exclusive. So how we do that is by promoting to various different communities groups that hotel ownership is possible for them, and that starts with education. So that is the mission of our group, is just redefining what hotel ownership can look like and showing everyone that it's possible if they choose and given the different avenues that they can take to get there.

Most of our communities do not realize that hotels are even owned by different groups, many groups think that Marriott, Hilton are the ownership groups, but hotels are franchise models. That is the mission of our company, is twofold, one to of course be investing in smart assets and driving a strong ROI growth back to our investors, but then within our investors, we want to make sure that anyone is able to have a piece of a hotel if that's your goal.

And what are some things that differentiate Elise from other firms in the space?

That piece right there is one that differentiates Elise Capital from other firms, is that our goal is to bring all different types of people into hotel investments. So how we do that is, one, by reducing some of those traditional barriers to entry and having extremely high investment thresholds and different rules and how you get to know us and things like that. I try to make myself accessible to people to get to know me so that they can find ways to invest in deals.

Then also, we do advisory and education so that if someone isn't ready for a deal today, they might have the tools and resources to do it either with us or on their own in five years from now, so it's about creating a pipeline of new investors as well.

And about how much of your time do you allocate towards that advisory educational piece?

About 30% of the time.

On top of just owning and running the deals, you're also spending about 30 of your time teaching folks how to do it themselves?

Yes, so very busy days.

I can imagine, that's fantastic.

Even right now, three or four of our investors have gone out and led their own deals as a sponsor, so it's working so far.

That's really cool. And we noted on your website you talk about your ESG initiatives, I want to give you a chance to talk a little bit more about that.

Right. We want to be smart investors, hotels are a community big impact in our environment today as that we produce a lot, a lot of energy goes into making sure a hotel runs well, so we want to make sure that we're being as eco-friendly as possible. And it can be simple things, just making sure that if a room is not in use, that we're closing the curtain so that we're not overly running AC. It sounds simple, but when hotels are a hundred rooms or even some that are thousands of room, it adds up very quickly. So things of that sort, making sure that the AC is at a right temperature when a room is not in use.

Just thinking of, most hotels, the US national occupancy in 2023 was about 65%, so let's make sure that 35% of our rooms are not running like they're in use and just wasting energy and things of that sort. And then we're looking to do other things like making sure that we're having charging stations in our parking lot, like how do we use some spaces to do that? Or in some cases, can we get solar in our hotel and on our roofs and things of that sort? So just trying to find different ways to support our communities around us. But one of the best ways to do that too is just creating jobs, hotels create a lot of jobs for a community, so making sure that we're being a responsible employer.

Sure. And as we all know, it's been some very interesting times we were living in and we've found a lot of folks over the last few years have seen some challenges in fundraising and getting folks to invest into various opportunities. And so I wanted to just hear about how you've navigated the fundraising environment over the last few years and how that's impacted Elise?

Yes, the financing market and climate right now has certainly impacted us. It's a tricky space to navigate as something new is happening each week, but how we make sure that we're managing through them well is by first protecting our assets, going and finding loans that are not going to be too high of an interest and completely deplete all of our funds. Even before that, when we acquire a hotel, having extra cash on reserves so that we can protect the asset if anything were to happen and we need to float cash for a longer amount of time.

And then just really being ambitious in how we asset manage our properties. So our expectations from our onsite teams are pretty high when it comes to budgeting and controlling costs, but being as productive as possible. But we want to continue to stay innovative, to stay a great culture employee morale so that we're not wasting expenses on things that aren't necessary. So spending when it's necessary, but not just because in our current climate, having cash on hand and being liquid is what's going to allow for success.

Shifting the focus a bit, McGuireWoods is focused on promoting the progress of black professionals and private equity finance and entrepreneurship, and especially those who are committed to making positive impacts in the communities they serve, much like Elise Capital. And so I just wanted to focus for a bit on some of the table stakes and pain points for that community and the communities that you're focused on.

And so it's widely recognized that the importance of building and maintaining long-term relationships is fundamental in building a fund. And mindful relationship building is key to building trust with LPs and allowing them to become familiar with your management style and operation strategy, and that often comes down to who knows you or who do you know. And so I'm curious from your perspective how you found the process of building relationships with LPs in a landscape where according to multiple sources, representation of black women in private equity, C-suites hovers around 1%.

The first piece is that relationships are key, communities and having a group of investors and their network and tapping into that as well is very important and critical to be in the PE space. So for us, it's a lot harder to get a deal done if you don't have the right relationships, and the relationships are what is going to get you there. And when you form those relationships, it's building a trusting and healthy space so that person also feels comfortable referring their relationship, so it really becomes a ripple effect, and it's why you have to move with integrity and everything you do have a strong ethics space in order to make sure that your fund succeeds.

Because someone with my profile, where not a lot of people see black women in private equity, having one failure or one thing going wrong can really amplify someone else's doubt that they were harboring to begin with. So it's important to continue to maintain relationships, but also make sure that your assets are performing and the track record begins to speak for itself.

And something that I like about your story is that you started out with the specific goal of hotel ownership and then you educated yourself about what it takes to become a hotel owner. And then presumably, and correct me if I'm wrong, but through that process, maybe you became more familiar with the whole asset management landscape and private equity and all of the necessary thresholds that would be required for you to become a hotel owner and fulfill your dream. Is that what that process looked like? And if so, were there relationships that were important to you in getting to where you are now?

Yeah, so that's exactly what my process looked like. And to detail it out further, when I realized what it would take to get to the ownership space, I started taking jobs in all of those areas. So I've worked in asset management, I've worked for smaller development companies, I've worked for management groups who are managing on behalf of very large private equity groups so that I could see how are these other companies working, what is the skillset that all need to have in order to do that? So that was the first thing on my to-do list, is build my skillset.

And then while I was doing that, that was also building the relationships, and those most important relationships that I built actually ended up being with the brand companies. So one of the things that I thought of and is just learning to work in who you are as a person and learning to work with your personality. So for myself, I am more of an introverted type of person for sure, going out and just doing cold calls every day and things of that sort probably isn't going to be where I would have the best success.

But where I would and where I do succeed better is by introductions, the way that I thought about it like, these hotel brands, they're working with thousands of investors with lenders and different types of groups, they're working with everyone. I need to form a good relationship with them so that they'll support me and vouch for me when I go out to someone else or make a warm introduction, things of that sort. So I would value the relationship in that way, and what was the best relationships to build is one in how I work, and that's what worked best for me.

That's great. And so one more thing I wanted to expand on is the educational component of what you do. I think that's super unique and extremely impressive and important, how much time that you dedicate to creating pathways for other people who might be interested in this asset class. I think it's often so much the case that in under communities that are underrepresented in finance and capital allocation, the problem with accessing the pipeline isn't a lack of any qualification, but simply a lack of awareness of what's out there and the existing pathways to get to it.

And it sounds like you've had that experience where you knew what you wanted and you struck a path to figure out what existed to help you get there. And to the extent that things weren't in place or didn't exist in order to help you access that capital or access that asset class, you're creating those pathways, which is phenomenal. So I just wanted to give you an opportunity to speak to the importance of that educational component and sharing you think it would be important for this audience to know?

How I've looked at the educational component is thinking back to myself in undergrad, what did I wish that I knew back then? And thinking of that, I've expanded in how I educate as well by making sure that I'm doing speaking engagements at universities so from a young age, people are realizing, I can be a investor or own a hotel if I want to or launch a hotel investment firm. So it's also speaking at schools that normally wouldn't get that type of person coming. So I've done speaking engagements at a lot of different HBCUs like Morgan State or FMUI I'd spoke at as well, and just making sure that I'm talking to so many different types of schools is the first thing because I think that it's important to realize what's possible at a young age and you can decide if you want to pursue it or not, but at least you know that it's a thing.

And then on the second piece, what I am also doing on the education side is speaking at conferences, podcasts, things of that sort and Elise Capital does a webinar on highlighting a different component of the hotel industry each quarter. Those are the first things, but the biggest thing that people should know is how a hotel investment is structured and who the main players are. So the biggest player is going to be the equity group, which is a group like Elise Capital, we are the ownership of the hotel. But then as I had mentioned before, hotels are oftentimes franchises, so you have the franchise, which would be your Hilton, Marriott, IHG, Choice, Wyndham, Hyatt, there's a lot of hotel franchises out there, so that's your second big player.

But the third that often gets overlooked as well is that there's also usually a third party management company, and that management company is actually the one who is running the hotel day to day. So even with a lot of different Hilton or Marriott, they don't typically own the hotel, nor do they typically run the hotel. So that is my biggest takeaway in how a hotel investment is structured, and that's why hotels are able to be so successful, is because they're both a real estate asset, but then they're also the operating company. So if you're in the right market, you're already gaining value through market appreciation as real estate is skyrocketing, but you're also able to control your revenues on a daily basis. Unlike multifamily or office where you're usually in a monthly lease, in a hotel, we're changing our rates every single day, oftentimes, multiple times per day.

Going back to our question on how can we protect assets in this financial market where interest rates are going up, the cost of labor is going up, how hotels benefit from that is that we're able to control our rates so that we can drive revenues as these costs are increasing as well to protect our bottom line.

Right. Thank you, that's great.

That's awesome. Especially the work to expose the industry to folks who wouldn't necessarily see that, I think exposure is such a critical piece that if you don't know what's out there, how are you going to pursue it?

Exactly.

So [inaudible 00:21:18] going out to those schools and doing that. We always like to end each episode with something a little bit more fun or off-topic just to help our guests get to introduce themselves to the audience in a different way. So a question I wanted to ask you is, what is a book that you've read recently that's been impactful or something that's been on your mind recently?

A book I read recently was called The Midnight Library, and I really enjoyed that book because it was basically about a woman who wasn't satisfied in life, and in the Midnight Library, it's a library of all of your what if choices, like what if I went to this school? What if I moved to this city? And you're able to jump through each book and see how your life would've played out if you had gone through that what if. And I just thought that was a cool concept because most people always have something in the back of their mind, it might not be a regret, but it's just a, I wonder what would've turned out, and am I in my happiest where I'm actually at versus what that other option could be? So I won't give away the ending of the book, but it was great, it makes you think and reflect type of.

Yeah, that's a fascinating concept, that's intriguing for sure.

That one's on my list, so I'm grateful that you didn't spoil it, Kendra. All right, well, thank you so much for your time today, Kendra, it was awesome learning more about you and about Elise Capital. And Dan and I and our McGuireWoods team wish you every success as you continue to grow your firm, but also grow the industry and make it more inclusive for others who might have similar aspirations, so thanks again.

Yes, thank you, it was a pleasure talking to you today.

Thank you for having me.

Take care.

Thank you for joining us on this episode of Accessing the Pipeline. To learn more about today's discussion, please email bpef@mcguirewoods.com, we look forward to hearing from you.