Make That Two Hotels
Hotel Equities plans to break ground this year on a 132-key Hampton Inn and a 124-key Residence Inn. (Between that, and your kids soon being out of school for the summer, and it's a great time not to be home.)
The Hampton Inn will be next to Sterling Point office park off Ashford-Dunwoody Road; the Residence Inn will connect to the current home of the Spruill Center for the Arts. We had a sprawling interview with Hotel Equities' COO Brad Rahinsky yesterday during the Hunter Hotel Conference at the Marriott Marquis in Downtown Atlanta.
Brad says Central Perimeter is justifying the additional rooms in large part thanks to State Farm, which has tightened the office market and helped supply not only occupancy increases during the week, but on the weekends as well. Hotel Equities owns the Fairfield Inn & Suites in Sandy Springs, where nightly rates have climbed past $200. Plus, to offset development costs, Brad says it's selling four outparcels at its Hampton site, one already slated for a Corner Cafe. “The revenue that would be thrown off on those outparcels will pay for the debt service,” he says. “[The Hampton] starts cash flowing the day we open the doors.
The two hotels are part of a pipeline of $120M coming out of the ground for the developer/operator this year, including its largest deal to-date, a 175-key, $52M resort-style Residence Inn by Marriott in Miami Beach. Brad also says the firm is raising capital for its second fund worth $140M (vastly larger than its first, $35M). The fund will be used to develop and acquire value-add hotels. “We like ugly, under-managed hotels. And we like hair on the deal,” Brad says. It's also letting the firm expand its reach beyond the Southeast, including into Missouri, DC, Boston, NY, Texas, LA, San Fran, and Denver: “We're also looking in the Phoenix area, but that would be an acquisition though.”