A Jamaican investment group paid $75 million last week for the Doubletree by Hilton, which neighbors Universal Orlando's east entrance. At almost $100,000 per key, it's one of the highest prices paid for a hotel acquisition in Greater Orlando this year.
Built in 1974, the 754-unit hotel sits on 16.52 gross acres at the northeast corner of Major Boulevard and S. Kirkman Road, directly across the street from Universal Orlando's east entrance.
The property was sold by an LLC affiliate of Blackstone Real Estate Advisors out of New York, and bought by an affiliate of Sagicor Life Jamaica Ltd., a top insurance, banking and investment firm in Jamaica.
The company's Sagicor Real Estate X Fund Ltd. has been acquiring hotel and resort properties since 2010, mostly in the Caribbean, through its managed real estate funds.
Arlington, Va.-basedInterstate Hotels & Resorts, one of the largest management companies with 460 properties worldwide, will manage the property, its fourth Greater Orlando-area hotel.
The acquisition price can be broken down to $99,469 per key, according to deed doc taxes paid, but required renovations at the property will likely push the eventual end-price to around $125,000 per key, which is approaching replacement cost for the hotel development market, said Paul Sexton, vice president of HREC Investment Advisors, which specializes in the lodging industry.
"This was very good pricing for the seller and is reflective of where we're at in the market, which is approaching replacement cost," Sexton said. "As we do that, it tends to lift prices of resale while making new hotel development more feasible."
Replacement cost (new construction) of select service hotels is around $140,000 per key now for Orlando, according to Sexton. When existing property sales approach 90 percent of replacement cost, as they are now locally, buyers are banking on replacement cost rising to 100 percent by the time their property renovations are done, he said.
Hotel sales in Orlando are on pace for a record year in 2015. This Doubletree by Hilton's price per key may trail only the Blackstone Group acquisition of the neighboring Ritz Carlton and JW Marriott in Grande Lakes for more than $1 billion earlier this year.