Hollywood-based hotel owner-operator AD1 Global paid a recorded $12.9 million on Thursday for the 224-key Quality Suites Royale Parc Suites in Kissimmee, and will consider a flag change before making immediate PIP investments, a lead executive with the company told GrowthSpotter.
"We already have our management team there taking over, and are very happy with the new acquisition," said president Daniel Berman. "Being that this is an extended stay property with all suites, we found that product type to be very attractive."
Choice Hotels has time remaining on its Quality flag agreement for the property at 5876 W. Irlo Bronson Memorial Highway, which AD1 will continue operating with for the time being. But the new owner is evaluating other flag options, Berman said.
"We're looking for the best path forward for that property," he added, noting that renovation or Property Improvement Plan (PIP) investments are undecided.
AD1 sourced a $15.5 million loan from The Bancorp to help finance the acquisition, and future renovation or flag conversion work on the property.
AD1's hotels did not suffer any structural damage during Hurricane Irma. The company has a fifth hotel totaling 315 rooms planned for 5.18 acres bought in August near SeaWorld, and a trio of select-service hotels with shared water park planned for 57 acres on Bali Boulevard.
The Quality Suites seller was an affiliate of Dallas-based Lone Star Funds, a private equity firm that invests globally in real estate, equity, credit and other financial assets.
Hudson Advisors had managed the asset for Lone Star, which previously paid $10 million in 2014 after acquiring a portfolio of commercial real estate loan notes that included this property.
They operated it for a few years, brought it back up to profitability and put it on the market in 2016 with one broker, before moving the listing to Paul Sexton of HREC Investment Advisors early this year.
"What's interesting is this property in 2009 through 2011 was doing over 80 percent occupancy at a respectable average rate, at a point in time when everyone else in the Kissimmee market was doing 50 percent occupancy if they were lucky," Sexton said. "There was a dip in 2011 when the previous owner went into bankruptcy and let it slip. But because this is an all-suite property, that (room size) is favored along the W192 corridor."