Tampa-area hotelier Ben Mallah has sold a Hawthorn Suites on the International Drive corridor to a California firm looking to convert it from an extended-stay hotel to multifamily use.
Mallah's Equity Management Partners (EMP) acquired the former first-generation Marriott Residence Inn at 7975 Canada Dr. in 2016 for $9.7 million and poured over $2.3 million into renovations to bring the 1983 asset up to Wyndham standards.
The property sits on 5.2 acres in the heart of the I-Drive corridor and consists of 14 two-story buildings comprising 176 all-suite units with fireplaces and fully equipped kitchens. Dozens of units have vaulted ceilings and separate loft spaces with a second full bathroom. Amenities include a fitness center, basketball court, breakfast cafe, pool and meeting space.
EMP sold it Friday to The Lighthouse Group, a Pacific Palisades private equity group, for $14.4 million. Mallah told GrowthSpotter he was hoping for a larger return, but he thinks the buyer's plan to reposition the asset makes sense.
"Honestly, that type of hotel is harder to operate than a regular hotel because the buildings are so spread out," Mallah said. "It kills the housekeeping staff."
HREC Vice President Paul Sexton represented the seller. It was his second time selling the property -- he previously sold it to Mallah after the hotel was placed in receivership during the recession. At that point, Marriott had pulled the Residence Inn flag.
"Hawthorn follows these first-generation Residence Inns all over the country," he said. "It's a part of their business plan."
So, too, does Lighthouse Group. The firm's strategy is to identify undervalued, underperforming and distressed real estate assets in select markets across the U.S. in which it can add value through rehabilitation, redevelopment and repositioning.
"It's not that surprising, really," Sexton said. "I had all kinds of sites on the I-Drive corridor pegged as hotel sites that are going multifamily now. That's the market."
Mallah, on of the most colorful characters in Florida real estate, told GrowthSpotter he hopes to reinvest the proceeds locally, if he can find the right value-add deal. "Tough to find (in the) market right now."
His company owns several hotel properties in the Orlando tourism corridor, and EMP has begun construction on a 4,800-square-foot retail building on a parcel he split from the parking lot of his Four Points by Sheraton Orlando.