UPDATED: JANUARY 8, 2016 10:10 AM — Jeffrey Magness, a lead executive for Arkansas-based fuel wholesaler Magness Oil, paid more than $4.9 million within the past week for the Ramada Orlando Downtown, and may invest up to $1 million more in upgrades over the coming year, the buyer's commercial broker told GrowthSpotter on Friday morning.
Located at 3155 S. John Young Parkway, the five-story, 205-key hotel was built in 1972, and had been owned for the past three years by Platinum Eagles 2011, an LLC affiliate of hotel investor B.P. Sodhi, who paid $2.5 million for the property in February 2013.
The Ramada Downtown was sold via Auction.com on Oct. 29, with a closing in late December and transfer of funds on Jan. 4.
While there were multiple bidders in the auction, the property sold for just under $24,000 per key, based on deed doc taxes paid to Orange County. The price was a bargain for Magness and well below local market value, despite clear renovation needs on the property, said Kent Hricko, senior associate specializing in hospitality for Marcus & Millichap, who represented the seller initially and then closed the deal with Magness.
The hotel was partially renovated prior to sale, with 100 of the 205 rooms receiving new furniture and assets. The other 105 rooms still need those upgrades, and the property as a whole has "a lot of deferred maintenance to catch up on," Hricko said.
Additional investment by Magness could approach $1 million, based on rough estimates by Hricko for upgrade costs to meet Wyndham's Ramada flag standards, and the costs to catch up to deferred maintenance.
The property was generating occupancy of roughly 70 percent on a $48 ADR, Hricko said, figures that stand to increase after renovations. A search Friday morning on the hotel's website for two adults over six nights in mid-March generated a low rate of $79.
Attempts to reach Magness for comment on Friday morning were unsuccessful. Calls to Magness Oil went unanswered, though the company phone system does indicate a division named Magness Hotel Properties.
Magness is also a partner in Gregory-Magness Properties, a commercial and residential development group based in northern Arkansas.
The Ramada's seller, Sodhi, also sold his Travelodge Inn & Suites near Orlando International Airport (1853 McCoy Road) back on Nov. 30 for $4.59 million.
Sodhi will be looking to reinvest the income from his two hotel sales into one or more hotel properties to fulfill a 1031 exchange opportunity, Hricko said.