New Jersey-based owner-operator Pinnacle Hospitality Group LLC paid $10 million on Wednesday in an off-market deal for its third hotel in Orlando's tourist corridor, and may free up more capital for local acquisitions this year, managing members with the company told GrowthSpotter.
Located at 7701 Universal Blvd., the newly-acquired Country Inn & Suites (170 keys) occupies 2.26 acres just north of the intersection with Sand Lake Road.
Pinnacle now owns and operates six hotels across the country, three of which are near Orlando's International Drive. The company's other two local properties are the Clarion Inn & Suites and Red Roof Inn on Hawaiian Court, south of the Orange County Convention Center.
With an established property management team here, Pinnacle manager Chet Patel began looking last year for value-add acquisition targets in the tourist corridor, and zeroed in on this particular Country Inn.
"We wanted to be in that particular area of the tourist corridor further north, and so I just cold-called this hotel's owner," he said of the eventual off-market purchase. "We found they were absentee owners and this property was underserved from a management perspective. It's built well, and the location is central to attractions and new development."
Patel said his research with STR Global's Star Report indicated this hotel had room for 10 percent gains in occupancy and ADR. He learned the owners wanted to retire, and this was their last Orlando asset.
"We think there's great potential to bring it around with our experience in marketing," Patel said.
The seller was Maryland-based SMS Hospitality LLC, which previously paid $10.35 million for the hotel in July 2005. Made up of family and private investors, the group owned two hotels in Maryland and Orlando, both of which have now been sold.
"It was a personal decision of ours to sell now, as we're at retirement age," SMS managing member Robert Munyon told GrowthSpotter. "We have no plans to reinvest (in local real estate)."
Pinnacle will retain the Country Inn flag and make capital improvements for a "small PIP that's required," said managing member Garry Hesselbacher.
Pinnacle sourced a $7.28 million loan from ReadyCap Commercial to help finance the acquisition. The company also recently refinanced another Orlando property to free up capital for this purchase.
Hesselbacher said the company sold another hotel in New Jersey last week, and will roll those proceeds into a pair of property acquisitions in Delaware.
Looking forward, Pinnacle may free up more capital for acquisitions this year through another property refinancing, Hesselbacher said.
"If we did there's a good likelihood it will be in the Orlando market, because we have the management and sales team in place," he said. "We're usually looking for undervalued properties, select service is our niche."