AJ Capital founder pivots, prepares for rebound

On March 10, HOTELS sat down in Chicago with AJ Capital Partners Founder Ben Weprin, who spoke with a strong will and determination about ongoing development for his Graduate hotels near or on college campuses, which had 22 hotels open and 13 in development. In total, the owner-operator has more than US$3 billion in assets. Two weeks later, a lot had changed.

In a follow-up interview, while the coronavirus was mauling the United States and closing college campuses, a shaken Weprin searched for words to describe his plans after deciding to close all the Graduate hotels until campuses reopened and business resumed.

AJ Capital's Ben Weprin: "When I started in 2008, I didn’t have any legacy assets... Now I have to protect the house."
AJ Capital’s Ben Weprin: “When I started in 2008, I didn’t have any legacy assets… Now I have to protect the house.”

HOTELS: How are you responding to this moment?

Ben Weprin: It’s not really what you say, it’s what you do in these types of situations. And people are looking to people like me to see how we react. There’s a void of inspiration and hope. So, I’m just trying to stay – I wouldn’t say positive or optimistic are the right words – as calm and thoughtful as possible.

“You can’t sit here and say, ‘Hey, rally the troops and give a Vince Lombardi speech.’ It’s not the time for that. I’ve spent a lot of time circling back with other folks in the industry, and the community has been incredibly supportive as a whole, from other owners to lenders and investors.

H: Two weeks ago you were so determined. What has this done to your will and your desire, from a business perspective?

BW: No virus can touch my dreams. You can’t lay a hand on it. This is a speed bump. It’s certainly challenging, though, and it’s going to hurt momentum for everybody. But everyone’s in this together. So you’re all coming out of it together. It’s an equal playing field. And when you’re committed to a cause that you think is bigger than you. This doesn’t stop that.

Am I going to have a lot of stuff to deal with, adversity and challenges? 100%. But so is everybody else… We are up for the challenge… To think that universities would all be shut down, the weight of that is unprecedented. Do I think universities are going to reopen and be the same? Absolutely, I do. 100%. It’s going to take time and there’ll be a new normal. But do I think that humans are going to retreat and live by themselves? Absolutely not.

H: Have you been able to quantify what you may lose here?

BW: It’s dependent upon the duration. We’re in total triage mode. We’ve closed down every single one of our hotels, we’ve furloughed and let go an astronomical amount of people. And the only thing I keep thinking is that I’ve got to survive because all of us need to be around on the other side to recreate all of these jobs.

Certainly, we are moving forward with a bunch of our projects. We are going to pause some of the others, depending on where they are in the capital stack because you just want to preserve as much liquidity as possible… We’re about to finish in Chapel Hill, North Carolina, and Roosevelt Island, New York. Others that are in the beginning phase, we’ll take a pause…

When I started in 2008, I didn’t have any legacy assets. I didn’t have any people. I was just looking for opportunity. Now I have to protect the house.

H: Where is the opportunity in this crisis?

BW: There’ll certainly be opportunity in distress. Opportunity, just like 2008, 2009, 2010. A lot of people made their careers based on looking for creative ways to reposition, purchase, buy. If you have liquidity, there’s going to be a lot of assets out there. I do think it’s different with the lenders, though, this time. Because there’s just a lot more empathy in the lending climate none of the banks want to be seen as trying to take advantage of an act of God. So we’ve called or reached out proactively to every single one of our lenders and we’ve had wonderful conversations, great conversations. I sound like Donald Trump…

Our businesses are not built for zero revenue. It doesn’t work. So whatever the government does in terms of support… It’s hard to quantify the losses.

H: What do you think you might do differently from a development, operation standpoint?

BW: You realize you just can’t take anything for granted. You’re going to have less people doing more jobs – just stretching your capacity as far as you can, every single dollar. Not that it doesn’t always count, but it counts even more when you don’t know where the next one is coming from… Now it’s going to be how strong your strategy is and how good of an operator you are.

H: What’s the longer-term implication here?

BW: There are going to be some new normals in society. I’d be naive to think that I know what those are, but I definitely think the world is going to change. It already has. But do I think that people are never going to stay in hotels again? Absolutely, they will… We just know there’s a massive amount of fear and displacement and worry and concern, and there’s millions of people who have lost their jobs. So the emotional aspect of this is so deep. It’s so strong.

H: How are you managing this personally?

BW: I’m on the lake right now, if that tells you anything. I’m running, so I stopped to take the call. But I’m working every single day trying to spend as much time as I can with my kids. You take the time with them for granted. I’m just trying to keep gratitude for health and wellness and know that this too shall pass. It will pass. I don’t know when, but it’s going to pass. I’m going to be there. I’m going to be around when that happens.

And I will say, one thing I thought about during this, and I know this kind of sounds a little bit self-serving, but it’s really not. We need something to rally behind. And my biggest hope is that this thing turns, that this fall that we’re back to some sort of normalcy and universities and college can help provide that… That’s what we’re holding on to internally.