Miami hotel conversion to multi-family secures funding
Harbor Group International is providing $ 27.5 million for a multi-family hotel conversion project in Miami’s Coconut Grove neighborhood. The borrower is AB Asset Management, who used the financing to acquire and redevelop the property into a Class A multi-family community. The project is expected to be completed in September 2022.
In mid-March, AB Asset Management acquired the Residence Inn Coconut Grove from Hersha Hospitality Trust for $ 31 million. Avison Young negotiated the sale of the hotel of three buildings and 140 units.
Over the past few years, Coconut Grove has seen a wave of new business, office and retail developments, which are expected to revitalize neighborhood stores, cafes and restaurants.
The property sits at the gateway to the Grove business district, which includes 360,000 square feet of Class A office space. It sits directly on the Miami Trolley line, which provides access to employment centers and entertainment such as Downtown Miami, Coral Gables, the Performing Arts District and Midtown Miami.
Avison Young manager John K. Crotty said Avison Young received double-digit offers on the property, which is just minutes from shops, restaurants and several parks overlooking Biscayne Bay. .
“We were not surprised by the interest in the property primarily due to its location and the fact that it is within walking distance of major retailers and new developments,” said Crotty.
The asset is in an area that has been a destination for upscale condominiums, with recent high-rise developments in Park Grove, Grove at Grand Bay and Mr. C Residences. Still, HGI says The Grove only has a total multi-family rental inventory of just 1,870 apartments and no new projects under construction.
There is no Class A multi-family development in the business district, according to HGI. The deal is part of HGI’s whole multi-family loan platform, which began creating and closing loans in 2020.
In another recent hotel-to-apartment transaction, a newly formed partnership between subsidiaries of Blaze Partners and Argosy Real Estate Partners acquired a national brand long-term hotelI in Charlotte with plans to convert it into a market-priced apartment community.
Jonathan Needell, president and chief investment officer of KIMC, told GlobeSt.com that hotel concepts at the bottom of the quality ladder but in good locations are ripe for conversions. Especially since at present, some of these hotel assets are facing occupancy problems.
“Now they’re 20% occupied and have started to be turned into higher and better usage offers,” Needell told GlobeSt.com in the previous interview. “We’re seeing a number of them, and it’s an emerging trend.”