Atlanta-based Songy Highroads made its entry into the Orlando market with the $31 million acquisition of the iconic, sphere-topped Four Points Sheraton Orlando on International Drive.
The real estate firm has extensive hotel experience and can afford to wait out the pandemic for business travel to return, seller Ben Mallah said. His Equity Management Partners (EMP) bought the property in 2016 for $23 million and spent over $5 million on the Property Improvement Plan (PIP) to satisfy the Marriott brand requirements. He’s been trying to sell the hotel since 2019, with little success.
“Frankly, this one was sold at a pretty big discount,” Berkadia’s Preston Reid said. “So we had this under contract, and then had it appraised pre-COVID at 20% higher than the sales price. This buyer was still able to buy an asset in an internationally known market at a 20% discount to pre-COVID, and a lot of what I’m selling right now is not at a discount at all.”
The demand for leisure hotels along Florida’s coastal markets has rebounded this year. “They’re worth more than they were pre-COVID,” Reid said. But Orlando and Miami hotels have been disproportionately impacted because of the lack of corporate and international travel.
Located at 5905 International Drive, just west of the intersection with South Kirkman Road, the hotel was built in 1974 and has 19 floors with more than 152,000 gross square feet. Mallah said he received PPP loans, and his bank gave him three months of forbearance, but he was still “bleeding $1 million a month” to maintain the property and pay the tax bill.
Songy Highroads was able to source a $24.55 million loan from Argentic Real Estate Investment. The company currently has multiple real estate investments in South Florida, including The Fisher Inn Resort and Marina in the Florida Keys. It also owns and operates hotels in Atlanta, Nashville, Houston, Dallas, New Orleans and Washington, D.C. Company representatives were not immediately available for comment.
Reid said they have the capital to invest in even more improvements. “They’re not going to do an overhaul, but you know, a few spruce ups and just kind of ride the wave until next year,” he said. “Anybody buying Orlando theme park (hotels) right now is very, very bullish on the next several years — once we get on the other side of COVID and international travel comes back.”
Mallah said he won’t make a profit on the sale, but he was able to carve out a portion of the parking lot area to develop a multitenant retail building, which he intends to put on the market. “That’s what will end up saving me,” he said. “ We’re still waiting to find one tenant, then I can sell it, and it will help recapture some of the lost revenue.”
Reid previously represented Mallah in 2019 when he sold Marriott Courtyard on Palm Parkway. On this deal, he worked with Berkadia’s Wyatt Krapf and Michael Weinberg.