A South Carolina developer will invest over $20 million to convert two Kissimmee hotels into Class A apartment communities with attainable rents for hourly workers.
The buyer entity, The Teale LLC, paid nearly $12 million for the hotels last week. All three company officers are executives for the developer, Columbia-based Styx Companies, and are making their entry into the Florida market with the two conversions. The two properties will be branded as The Teale communities.
The larger property was the Quality Inn & Suites at 4978 W. Irlo Bronson Memorial Hwy, which sold for $8.675 million. The Teale also paid $3.3 million for the former Red Roof Inn at 4970 Kyngs Heath Road. The developer took out a $19.9 million loan from Ready Capital to finance the purchases and pay for the renovations to both properties.
Longtime Kissimmee hotelier Johnson Young, seller of the Quality Inn property, filed a Site Development Plan in February with Osceola County seeking to convert the 176-room Choice hotel into 200-unit multifamily community.
“This will be market-rate housing,” Styx partner Ryan Hyler told GrowthSpotter. “Our intent is to build a Class-A community with all the amenities and finishes that go into it, including clubrooms, fitness centers and pools. The only sacrifice will be the square footage of the unit.”
The county also has a pending Site Development Plan for the 89-room Sulaf Hotel Lake Buena Vista (the former Red Roof Inn) for a 100-unit residential conversion. Styx intends to replace the roof and repaint the building as part of the exterior renovations. The property is across the street from the Embassy Suites Orlando Lake Buena Vista South.
The Quality Inn sold at close to its full $9 million list price. Lily Wang with CINO International Realty brokered the sale, which also included the 7,272-square-foot multi-tenant retail strip center next door at 4960 W. Irlo Bronson Memorial Hwy., and the on-site hotel general manager residence at the rear of the property.
Wang told GrowthSpotter the hotel, which spans a 9.6-acre site, reduced its room count when it converted to an all-suites model. It has a pool and frontage on Lake Cecile. The property last sold in 2006 for $6 million.
Styx partner Julie Tuttle said firm will make cosmetic improvements to the retail property and convert the 176-room hotel into a 200-unit apartment community with an average unit size of 300 square feet. Many of the suites would be divided again into individual units.
“We don’t intend on it being a full gut reno down to the studs,” Tuttle said. “The intent is to finish it with new materials and work with what’s there.” The developer will install new kitchenettes and closet systems, improve the pool and other amenities, expand the common areas and enhance the landscaping, she said.
Both properties will get new dog parks. At the Quality Inn, the developers will demolish the manager’s residence and create a new outdoor amenity that enhances the views of Lake Cecile.
“We had been looking in another market to do workforce housing for a while, but it was going to be ground-up construction, and we couldn’t make the numbers work,” Hyler said.
The hotel conversions can be done faster, and at a lower cost. They looked at sites in four Central Florida counties, but settled on Osceola’s W192 corridor because of its flexible Commercial Tourist zoning, which allows higher residential density than any of the other jurisdictions.
The rents would start in the low $1,000s and would include utilities, cable, internet service and valet trash service. “The idea is we’re trying to simplify the process,” Hyler said. “By including the utilities in with the rent, it eliminates the need for someone to put down a security deposit with the power company and the cable company.”
Tuttle said the company primarily focuses on multifamily construction and has completed an adaptive reuse of a commercial building for studio apartments. They also engaged Wesseldyk + Associates, which specializes in adaptive reuse residential conversions, as project architect.