UPDATED: October 30, 2017 2:27 PM — Affiliates of Rosen Hotels & Resorts paid a combined $24.3 million or more on Thursday for two small aging hotels off International Drive that neighbor its Rosen Centre Hotel, which the seller told GrowthSpotter will likely be demolished for new construction.
The properties include the 4.15-acre, 223-key Clarion Inn and Suites at 9956 Hawaiian Court, built in 1983 and sold for a recorded $14.85 million; and the 3.12-acre, 134-key Red Roof Inn at 9922 Hawaiian Court, built in 1989 sold for $9.45 million.
The combined 7.27 acres lie directly east of the 24-story, 1,335-key Rosen Centre built in 1995, which has bridge access to the Orange County Convention Center's West Concourse.
Deeds for the sales were recorded Monday morning in Orange County. No new acquisition loans were cited with the deeds.
Officials with Rosen Hotels did not respond to requests for comment on Monday regarding plans for the newly-acquired properties. Orange County planning staff report no record of plans filed or discussed for expansion of the Rosen Centre.
These are the eighth and ninth hotels in the Rosen portfolio in Orlando's tourism corridor.
The sellers were affiliates of New Jersey-based owner-operator Pinnacle Hospitality Group LLC, which previously paid $8.36 million in 2005 for the Clarion and $2.88 million in 2014 for the Red Roof.
"Age of the property was primarily why we sold," Chet Patel, principal with Pinnacle, said Monday. "The location was second to none, but I can't see it competing with new product coming in around the convention center.
"I couldn't see the (Orlando hotel) market going up any more in value either," he continued. "I think we were capped out with the revenue potential for those two buildings."
The transaction was off-market, Patel said. Rosen Hotels is expected to run the two hotels "for the time being" with active flag agreements before demolishing them, he added.
Prior to this sale Pinnacle owned three hotels in Orlando's tourism corridor, the other being a Country Inn & Suites on Universal Boulevard that it paid $10 million for in January.
Patel said Pinnacle will reinvest its proceeds in Orlando if it can find another value-add hotel opportunity, but is not rushed to do so by a 1031 exchange deadline.