Three years after buying the former HomeSuitesHome on Kissimmee's W192 corridor and announcing plans to convert it to a Doubletree, Hudson Holdings has quietly embarked on a multimillion-dollar renovation of the 33-year-old property and will relaunch this month as an Extended Stay Micro Suites.
The Delray Beach hotelier paid $6 million in 2015 for the 400-room hotel, with plans at the time to convert it to all-suite property with 200-plus rooms and interior corridors and reflag as a Doubletree Hotel.
Hudson Holdings soon decided to revitalize and enhance the long-standing property with Micro Suites to serve both short-term and extended stay guests. All the existing 403 rooms will become Extended Stay Micro Suites.
On Thursday, Columbia Pacific Advisors announced it had provided a $14.8 million short-term bridge loan to Hudson for the refinancing and modernization of the hotel. The financing was arranged through its bridge lending platform, CPIF Lending.
The first units will be delivered by next week, and all of the units will be completed by this fall.
Hudson Holdings Managing Director Steven Michael cited the shortage of affordable rental properties in the Orlando-Kissimmee market for the change in strategy.
"A large portion of the workforce in the market are employed in the service and retail industries where salaries are typically close to minimum wage and it is difficult for people in the area to find units that accommodate their limited budgets," he said. "Our goal is to provide this vital workforce with attractive and flexible housing options."
Earlier this year, Columbia Pacific Advisors through its bridge lending platform funded $10.25 million in short-term debt to complete the conversion of a former RV Park into a "tiny home" resort community near Salem, Oregon.
Billy Meyer, managing director of real estate lending for Columbia Pacific Advisors, said the experience gained through that deal helped his team to understand and get comfortable with Hudson Holdings' business plan.
"There are numerous complexities in repositioning a pre-existing hotel into an attractive Extended Stay Micro Suite and, candidly, there are not a lot of examples to lean on," Meyer said.
Kissimmee's W192 corridor has a plethora of dated hotel properties that are ripe for residential conversion. The Backlot Apartments at 8600 W. Irlo Bronson Memorial Highway are one such example. A former Howard Johnson on E192 was also converted into apartments in 2016.
Meyer said his firm was able to delve deep into the micro-unit submarket after the concept took off in Seattle a decade ago.
"That allowed us to see where the demand drivers were for these specific living situations and helped us to get comfortable with the project," he said.
Meyer added that tiny homes and micro-units are part of a developing market that Columbia Pacific Advisors feels has great growth potential.
"It's a space we believe is still in the early innings and helps to address great need for affordable housing," Meyer said.
The plans allow for completion without disrupting current Extended Stay guests.
"By updating one floor at a time, no one has to vacate," Michael said. "As our goal is to improve the housing options, termination was never an option."