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Last week in this space we addressed the seemingly endless appetite investors and developers appear to have for apartments along the Gulf Coast. This week we'll focus on another apparently bulletproof asset class of this cycle: hospitality.
Fueled by tourism gains, population and job growth and increases in consumer discretionary spending, hotels have been a commercial real estate darling during this recovery — especially in Florida.
Perhaps the most notable transaction of the year — to date — was the early July sale of the 520-room Tampa Hilton in downtown Tampa. That $101 million acquisition by CrossHarbor Capital Partners marked just the fourth time in the region's history that a lodging property traded for nine figures.
But now another institutional buyer has waded into the Tampa hotel market with a big score, and yet another developer has announced plans to add to an already burgeoning inventory along the Gulf Coast.
Walton Street Capital's $42.35 million purchase -- likely north of $50 million when goodwill, fixtures, furniture and equipment are added in — of the 299-room Westin Tampa Harbour Island further highlights the level of interest institutional buyers have in this market.
Walton Street, a Chicago-based private equity firm that has invested more than $7 billion, also owns the PGA National Resort & Spa, in Palm Beach Gardens. That property underwent a roughly $100 million renovation that began in 2014.
The company also is expected to invest about $15 million to upgrade the Westin Tampa, which was completed in 1987. In addition to its rooms, the 725 S. Harbour Island Blvd. hotel also contains more than 17,000 square feet of meeting space, a fitness center and a heated outdoor pool.
Holliday Fenoglio Fowler L.P. senior managing director and head of the firm's hospitality practice group Daniel C. Peek represented seller the Blackstone Group in the sale.
HFF also arranged for debt placement on behalf of Walton Street, which declined to comment on its purchase.
The Westin Tampa deal also comes as more hotels are sprouting up throughout the Gulf Coast.
Most recently, Puerto Rico-based Prisa Group announced plans for a 175-room AC Hotel by Marriott Tampa/Airport in the city's Westshore district. The hotel, in conjunction with Peachtree Hotel Group, will be developed in the 32-acre MetWest International mixed-use complex, which contains six upscale restaurants and other amenities and has close proximity to the International Plaza shopping mall.
In all, more than two dozen new hotels are being constructed or have recently been completed along the Gulf Coast. Clearwater Beach has six new hotels under construction alone; Sarasota has four underway and one that opened a few months ago downtown.
Prisa expects its hotel, slated to contain a fitness center, swimming pool and pool bar and 2,300 square feet of meeting space, to be completed in late 2017.
In all, Prisa and Peachtree are planning a trio of new hotels in Tampa and Orlando. All three will be managed by Marriott International.
Federico Stubbe, Prisa's president and CEO, says all three new hotels are intentionally being developed near “vibrant food, beverage and entertainment options.”
In addition to the three new hotels, Prisa has developed more than $750 million in hospitality projects since 2012, including the Ritz-Carlton Reserve Dorado Beach; West Beach Ritz-Carlton Reserve Residences and three Hyatt Place hotels.
Peachtree, meanwhile, controls a portfolio of 62 hotels containing more than 7,300 rooms.
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