UPDATED: June 15, 2017 9:25 AM — Louisville-based hotel owner-operator Schulte Hospitality Group paid more than $23.6 million on Tuesday to enter the Orlando market, buying the 214-key Castle Hotel in the heart of International Drive.
Located at 8629 International Dr. just south of I-Drive 360, the property lies across Universal Boulevard from the majority of Universal Orlando's 474 acres bought in December 2015.
The value of $23.6 million was indicated by doc stamp taxes paid on a deed filed Wednesday morning in Orange County. But this is likely an aggressive allocation by Schulte of the hotel's "real property" for taxable purposes, and what it can declare as "personal property" within the hotel to avoid paying taxes on.
That declared value reflects a price per key of $110,280, which is well below a price-per-key declared value for the nearby Hilton Homewood Suites Convention Center in February 2015 ($121,003).
Similar full-service hotels in other local submarkets that sold last year were the Orlando Airport Marriott Lakeside in June 2016 for $64.3 million ($132,000 per key), and the Embassy Suites Orlando Downtown for $35.4 million in March 2016 ($211,700/key), both figures being full sale prices -- including the value of tangible personal property that's not always reflected on the deed.
Officials with Schulte declined to comment on Wednesday about the purchase.
Schulte owns six hotels in South Florida, per its website, but this is its first asset in Greater Orlando. The company now has 95 properties nationwide.
The seller was an affiliate of Orlando-based The Kessler Enterprise, Inc., and its Kessler Collection of independently branded hotels, which previously paid $1.479 million for the I-Drive land in 1993.
The nine-story Castle Hotel was built in 1995, and thoroughly renovated in 2013 to be included in the Marriott Autograph Collection portfolio.
"We've owned this asset for 22 years ... and found it was time (to sell) with some other projects coming up," Brian Py, senior vice president for development, told GrowthSpotter.
Those include a 419-key JW Marriott now under construction in Savannah for Kessler, along with new Grand Bohemian hotels set to break ground this year in Charlotte and Greenville, South Carolina.
Kessler won't be actively looking to reinvest these proceeds under a 1031 exchange deadline, and don't have any new projects in Greater Orlando on the horizon, Py said.
Paul Sexton of HREC Investment Advisors represented Kessler in the sale.