A vacant hotel shell on Kissimmee’s W192 corridor that was previously condemned sold this week to an Atlanta-area investment group with plans to convert the property into multifamily residential.
The buyer, an affiliate of Infiniti Investment, paid $4.5 million cash for the one-time Toscana Suites hotel just south of Disney at 2950 Reedy Creek Blvd. The asset, which sits on 6.38 acres, includes the former restaurant, lounge, meeting space and hollowed-out rooms.
The Kabani Hotel Group at Marcus & Millichap represented the sellers and procured the buyer. Ahmed Kabani told GrowthSpotter the property generated multiple offers, all for some form of residential conversion or tear down.
“The market is soft right now,” he said. “Regular hotel buyers are very limited. Most of the buyers we’re getting are for some form of conversion to affordable housing or extended-stay. The problem is there’s no financing in the hotel market.”
The transaction follows the April 1 sale of Champions World Resort at 8655 W. Irlo Bronson Memorial Hwy., where the residential conversion is already underway. It was purchased by the same investment group that recently completed the conversion of the former Red Lion Hotel into The Maingate apartments. The group also owns the former Rodeway Inn, which abuts the former Toscana Suites hotel and is also slated for a residential conversion.
The seller, Fahad Jumani, had high hopes for the hotel. The family-owned hospitality company bought the long-vacant property in late 2016 for $2.4 million cash. At the time, the property was condemned and on the verge of racking up $1,500 per day in fines. The Jumanis signed a consent order pledging to clean up the property, file a Site Development Plan and start construction within six months.
The 10-acre parcel included an all-suites building, which the company renovated and reopened as a Hawthorne Suites in 2018. The family spared no expense, pouring $8 million into the renovation, but it helped them secure a deal with Wyndham to reopen the larger hotel as a Wyndham Garden Hotel.
The Jumanis estimated it would take $16 million to renovate the empty shell, convert it to an interior corridor hotel and bring everything up to the brand standard. They sought investment partners for over a year, then COVID hit.
About six months into the pandemic, they put the Hawthorne Suites on the market. It sold in December for $8 million to a Provo, Utah investor, who immediately converted it to multifamily residential. The renovated hotel suites already had fully equipped kitchens, in-unit laundry and sprinkler systems, so the relaunch as Avia Apartments at Reedy Creek took place seamlessly.
Kabani said the Infiniti group engaged the same architecture firm that had worked for the Jumanis to craft a multifamily project from the hotel skeleton building. “This group, they’re very sophisticated,” he said.
The latest sale took place after Osceola County’s W192 Development Authority kicked off a study on whether to regulate hotel and motel conversions in the tourism corridor. Planning firm Logan Simpson is developing conversion guidelines that could be incorporated into law. Those could include requiring owners to seek a conditional use permit before changing the use of a hotel or resort property to multifamily residential.
W192 Board Chairman John Classe previously told GrowthSpotter he recognizes that residential conversions are a natural progression for some older properties on the corridor, but he doesn’t want to see a proliferation of them in and around Celebration, Old Town and Margaritaville.
Executive Director Christina Morris said the School District of Osceola County could directly influence the number of motel conversions later this year when the school board updates its impact fee study. Up until now, SDOC has charged converted hotel room apartments at the same rate as new construction, making $11,362 per unit school impact fees one of the highest costs of the conversion.
The latest study looks at studio and 1-bedroom apartments separately to determine if the student-generation rate is lower for the smaller units. The preliminary data appears to confirm what proponents of motel conversion have been saying — that the number of students living in these units is insignificant.
The demographic study from Tischler Bise found that the student generation rate in single family homes and apartments was about the same, about three students for every 10 dwelling units, the rate for studios and 1-bedroom apartments was a measly .001 — or one student for every 100 units.
School District CFO Sarah Graber said the consultants and staff aren’t ready to make a recommendation on whether to create a separate category for low-impact housing units.
“There’s still a very small amount of data in our community for that type of product,” Graber said. “I don’t know if we’ll end up having that category. That’s a board decision and a county commission decision.”
The SDOC expects to complete the study and present a new ordinance to the school board and county commissioners over the summer. The new rates would go into effect in October.
EDITOR’S NOTE: This article has been updated to include the full sale price of the Hawthorn Inn.