The development team that paid $17.7 million in December for the 550-room Red Lion Hotel Kissimmee Maingate is wrapping up the preliminary designs on the hotel-to-workforce housing conversion.
The $40 million project was first reported by GrowthSpotter last summer. The hotel occupies nearly 16 acres just west of Disney property. It was built in phases, beginning in 1974.
Chicago-based T2 Capital Management is a joint venture partner with Orlando-based Cornerstone Property and Miami-based ICM Development on the project. T2, which specializes in the affordable housing space, provided $17.9 million in financing toward the purchase of the property.
T2 Founder and CEO Jeff Brown told GrowthSpotter his firm has a long-standing business relationship with Cornerstone’s Ed Carlson, and he felt the project met T2′s mission to address the region’s affordable housing needs.
“Our goal is to do investment that generates a positive economic return and that have meaningful social returns,” Brown said. “Our plan is to keep all the existing amenities in place, with some upgrades. The rooms will be modified."
The intent is to demolish some interior walls, but the hotel will not be razed, he said.
Architect Bruce Arthur of WHA Design said the Maingate Village concept calls for converting the hotel into roughly 340 rental apartments, half of which will be studios with rents starting at $725 per month. The balance will be primarily one-bedroom units with some two-bedroom units, Brown said.
The new owners also rezoned the property from a Planned Development to Commercial Tourist, which offers more flexibility.
The site plan shows a 9,000-square-foot fitness center/clubhouse, three pools, a volleyball court, tennis court and basketball court. Tenants also will have the option of renting 5-foot modular self-storage units on site. Brown said the fitness center may be leased to an outside operator or operated in-house.
The development team will also convert the 28,000 square feet of common space and meeting rooms into commercial and office uses. The hotel’s distinctive mirror-like siding will be removed.
With construction scheduled to commence in February, and completion expected in early 2021, the multi-family units will be delivered in phases and are expected to largely cater to Disney personnel and local service professionals.
Brown said T2 is currently eyeing other properties in the tourism corridor for residential conversions. “There’s a lot more demand than supply in the Orlando market, specifically in Kissimmee,” Brown said. “We’re working to build a portfolio of properties around the Disney campus.”
Paul Sexton with HREC Investment Advisors represented the seller, Carter Hospitality Group. The buyers were represented by Ahmed Kabani, senior director for Marcus & Millichap.
EDITOR’S NOTE: An earlier version of this story contained a misleading statement about school impact fees. The county is not waiving impact fees for this project.
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