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Sales of Orlando hotel properties reach record clip at $2 billion+

Sales of Orlando hotel properties reach record clip at $2 billion+
The 129-room Grande Lakes Courtyard by Marriott at 4120 Taft Vineland Rd. is on the market for $4.225 million, and has plenty of competition.

Hotel sales are heating up in Orlando, with some industry experts seeing near record volume for 2015, aided by available capital and owners wanting to get out following the recession.

"We are going to have one of our biggest years ever in terms of dollar volume of sales," said Paul Sexton, vice president of HREC Investment Advisors, which specializes in the lodging industry.

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At the current rate, Orlando could see at least three times the sales of its most recent peak year, which was 2013. That year saw $890 million of hotels sold and was weighted by the $717 million sale of the Peabody to Hyatt.

So far this year, more than $2 billion of hotel transactions have either closed or are under contract, according to HREC Investment Advisors.

They include the Blackstone Group buying the side-by-side Ritz Carlton and JW Marriott in Grande Lakes for more than $1 billion.

Hilton Worldwide is in the process of buying the Hilton Orlando Bonnet Creek and the Waldorf Astoria Orlando, which are adjacent to each other. This is part of a five hotel transaction in different parts of the country valued at $1.76 billion, with a good part of that amount allocated to the Orlando hotels, area brokers say.

ARC Hospitality Trust bought a $1.8 billion portfolio made up of 116 hotels, of which four are in the Orlando area. The hotels are Embassy Suites on International Drive for $22.2 million, the Homewood Suites on International Drive for $30.5 million, the Hampton Inn at the convention center for $12.2 million and the Courtyard By Marriott in Maitland for $14.1 million.

And there is plenty of inventory left. A sampling of Orlando-area properties on the market includes the 129-room Grande Lakes Courtyard by Marriott at 4120 Taft Vineland Rd. for $4.225 million, a 140-room Eurotel Inn at 830 Lee Rd. with the seller asking $4.5 million, a 110-room Super 8 Hotel at 5900 American Way for $6 million, and the 135-room Orlando convention area Wyndham flagged hotel at 1 International Dr., for $7.5 million.

Hotel brokers say the reasons for the activity have to do with capital, economic conditions and the appeal of Orange County.

Interest rates remain low, so investors have easier access to financing. Plus, there is a lot of capital out there from domestic buyers and a growing pool of foreign investors.

Owners who held onto their properties during the recession, hoping prices would go up, are finally seeing movement and listing their properties. Those who bought at the bottom are ready to unload.

Additionally, Orlando is on an upswing as the nation's top tourist destination.

The dynamic is making for plentiful transactions.

The buyers are as diverse as the kinds of hotels that are being sold. Some of the bigger purchasers include institutional investors, real estate investment trusts, regional companies that attract capital and then own and operate the hotel, and owner/operators.

Hotel owners make their money based on the residual cash flow after all expenses are paid and through capital appreciation.

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Only about 10 percent of investors are foreigners, led by Canadians, Latin Americans and some Asians, but the numbers are increasing.

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