Rex LLC plans a massive expansion of the historic Hotel Ella in Central Austin that will quadruple the number of guest rooms and add a flurry of amenities.
The real estate and technology company plans to add an anchor fine dining restaurant of "Paris-level quality," a cigar and scotch bar and a basement wine bar, according to founder and CEO Peter Rex. He aims to deliver a high-end environment where Austinites can "scratch a different kind of itch."
A rooftop garden and substantial underground parking could also be added. Rex estimated the cost of the expansion will exceed $100 million. An exact timeline for when the renovations might start was not revealed although Rex said he hopes to start "as soon as possible."
"The vision of it is to be the premier luxury hotel in Austin," Rex said. "The location there, we think, is one of one. It speaks for itself."
That expectation extends to the food service, as well.
"We don't want to be second to Houston and Dallas — we're going to be first," Rex said. "And Texas should be first, as well. ... I don't see why some of the leading people in culinary arts wouldn't want to make this their destination."
The 47-room Hotel Ella, at 1900 Rio Grande St., is anchored by the historic Goodall-Wooten Mansion, built in 1898. An office annex was added in the 1980s. Two stories of parking were added in 2002, according to a recent presentation to Austin's Historic Landmark Commission, which was the same year the property was converted to a hotel. The property was extensively renovated in 2013.
Rex's expansion would boost Hotel Ella to 213 rooms with 172 parking spaces. The Goodall-Wooten Mansion will remain as is and be home to new the restaurant, cigar lounge and wine bar, but the rest of the hotel will be razed to make room for the expansion, Rex said.
Once complete, Rex believes Hotel Ella will become a billion-dollar asset.
Rex also hopes to make it one of the most high-tech hotels in the world, with features such as voice recognition systems built into the rooms and an in-room, artificial intelligence concierge.
But the tech features don't step at the guest experience — they extend all the way to the hotel's ownership.
Hotel Ella will be tokenized on a blockchain, meaning accredited investors can buy fractional equity in the property. The minimum investment will be $1,000, and the property will be listed on Rex's OwnProp tokenization platform — which also lists a multifamily property in Mueller and an office complex in downtown Austin at 1002 West Ave. The latter has been 100% leased for the next five years by Phunware Inc. (Nasdaq: PHUN), Rex representatives said.
A small fundraising round for Hotel Ella is already live on OwnProp, though for now only $1.8 million is being raised for a limited renovation.
But even that listing contains ample materials for interested investors to conduct some due diligence. Someone could, for instance, see that Rex purchased the hotel for nearly $26.7 in November 2021. Also included is a local market overview, details about the future redevelopment of the property and a historical financial analysis that shows how Hotel Ella's revenue dipped during the Covid-19 pandemic, falling from $6.8 million in 2019 to $2.6 million in 2020.
Rex the company is a unique blend of technology and real estate, pursuing a multitude of startup ventures while also buying up property. It has about 300 overall employees, including about 150 in Austin. Peter Rex moved his company and his family to Austin in 2020 from the West Coast.
How tokenizing works
As an unregistered security, an investment in tokenized commercial real estate through OwnProp would be subject to a one-year hold period.
"If you compare that to the stock market, which is super liquid, that's a different story," said Cody Huggins, chief of staff at Rex. "If you compare it to private equity real estate deals right now, you're holding it for three, five, seven, maybe 10 years. So we are still bringing liquidity to an illiquid market."
OwnProp has already set up a chat service to answer questions from potential investors. Huggins said potential investors typically ask about why a tokenized investment is a good deal; how and when they will get their money back; and more general questions about the tokens themselves.
In the case of Hotel Ella, Rex expects to invite potential investors to the property to answer some of those questions in-person, while also giving people a firsthand look at the property.
Right now, OwnProp is limited to accredited investors — those with a net worth in excess of $1 million, or income of $200,000 for an individual or $300,000 with a partner over the prior two years, according to the U.S. Securities and Exchange Commission.
But the company hopes to one day open up tokenized investments to everyday investors, for instance allowing employees at Hotel Ella to invest in the property without having to meet the current $1,000 minimum.
"It's absolutely doable," Huggins said. "There's a path there; it's just figuring out when is the right time to go down that path."