Odessa Master Leased Lodge is a 134 housing unit lodge, built in 2013, consisting of 28 individual modular units located in Odessa, Texas. Each modular unit contains a shared living room and kitchen area with central HVAC. Every housing unit contains an XL Twin bed, storage compartments, television with DirecTV package, internet access and individual bathroom and shower facilities. The Lodge has a large exercise and game room and a separate common laundry building. The lodge is on private water and sewer and also has a large commercial kitchen and dining area which has substantial upside as that facility is not being utilized under the current lease agreement.
Odessa Master Leased Lodge has entered into a 3 year Master Lease Select Energy which started on May 1, 2017. The Lease terminates on April 30, 2020 unless renewed by the parties. Under the Lease, Select will pay monthly lease payments of $122,275 for the period May, 2018 to end of April, 2019 and $142,650 for the period of May, 2019 to end of April, 2020. Select Energy Services (www:selectenergyservices.com) (NYSE: “WTTR” with Market Cap of $1.6B) is a leading provider of water management and chemical solutions to the oil and gas industry. Odessa Lodge is strategically located in Odessa, Texas on Highway 385, which is a main transportation hub to the Permian Basin. The Permian Basin is a major source of oil and gas exploration and drilling in the United States. In addition to the current lease with select Energy, Odessa Lodge has previously had Weatherford International and Chevron as clients under long term lease agreements.
The Permian Basin is the world’s second largest natural gas and oil shale. Odessa Master Leased Lodge is in the heart of the action. “Exxon Mobil will triple production in the Permian Basin, the hottest US shale oil field, by 2025…Last year, Exxon doubled its Permian holdings through the $5.6 billion acquisition of companies owned by the Bass family” (https://www.cnbc.com/2018/01/30/exxon-mobil-will-triple-production-in-the-permian-basin-by-2025.html). “Chevron and its legacy companies have been a fixture in the Permian…since the early 1920s…and with approximately 2 million net acres of resources, Chevron is the Permian Basin’s largest net acreage holder” (www.chevron.com).
Note that will the scheduled rent increase in May, 2019, the returns on this opportunity will drastically increase.
