Lodging Magazine has named Noble CEO, Mit Shah, as one of its 2022 Luminaries

Noble Investment Group CEO implements a two-pronged development strategy

Mit Shah is CEO of Noble Investment Group, a real estate investment management firm specializing in select-service and extended-stay travel and hospitality with more than $5 billion in investments. He founded the company some 30 years ago, but his roots in hospitality go back to childhood, when, as the son of “entrepreneurial immigrants,” he built the work ethic and reputation that have brought him recognition and success. Shah, who presently serves as an executive committee member of the board of directors for the American Hotel & Lodging Association, has received many honors, the most recent of which is the Industry Real Estate Financing Advisory Council (IREFAC) Arne Sorenson Award for outstanding leadership in the hospitality industry. And in 2023, he will be named Hospitality Executive of the Year by the Penn State School of Hospitality Management and Alumni Society.

When asked to describe for LODGING the decisions that underlie his company’s overall investment strategy, he was clear: “Whatever makes money. As fiduciaries to state and corporate pensions, university endowments, and foundations around the world, our job is to make decisions based on the best interests of our beneficiaries, which include our country’s teachers, law enforcement, and firefighters. So, if we make more money developing than acquiring, we develop, and if we make more money acquiring than developing, we acquire. At the end of the day, it’s all about determining the best way to achieve the strongest risk-adjusted returns.”

Routes to Success in Development

Noble Investment Group typically devotes about 20 percent of its $750 million to $1 billion in equity each year to new development. The development strategy encompasses two different approaches: “One part of our development strategy is taking underutilized real estate in high-profile locations—such as surface parking for office and retail—and creating hospitality components, i.e., first-class select-service and extended-stay hotels,” he explains. Examples include a Courtyard by Marriott and Element by Westin, built last year in midtown Atlanta, Georgia; and a Tempo by Hilton, a new lifestyle brand, that is currently being developed in the Historic District of Savannah, Georgia. The other aspect of Noble’s development strategy is building midscale extended-stay properties, which can be built to a double-digit unleveraged yield and operate at 50 percent-plus profit margins.

Describing new development as “a core part of our DNA for three decades now,” Shah reflects on his first development project, a Hampton Inn, in the early 1990s, when the segment was relatively new, and investment required development. “At that time, you could build a Hampton Inn for$40,000 a room at a RevPAR of $40, which meant you could generate enough cash flow in that first year to produce 20 percent equity returns, then refinance your equity out a short time later.” Using this “wash, rinse, repeat” approach, he says, “we built a development business from the inception of the company to take advantage of that market.”

Shah says the price tag is different today, but the returns remain attractive. “We can deliver a midscale extended-stay property for a little over $100,000 a key, which can yield $80-$90 of RevPAR.” The urban developments, he adds, cost three times that amount but yield a worthwhile proportional return. In sum, “We believe that—even in this environment—there is an opportunity for growth in both these high-end city locations and in midscale extended stay.”

Fiduciary Responsibility

Shah concludes by stressing the care that Noble Investment Group takes as a steward of the funds entrusted to them. “We’re always focused on achieving the kind of return we’re targeting, and, in our business, that is a product of the right market and the right real estate. Our beneficiaries trust us as their fiduciary, so our job is to make decisions based on their best interests.”