MK Structures Disposition of Three Select Service Hotels
DECEMBER 5, 2006. Molinaro Koger (MK) announced today the successful completion of a transaction involving a group of select service hotels located in metro Birmingham, Alabama, which MK structured on behalf of a regional investor client. The group of properties consisted of the Hampton Inn, Holiday Inn Express and Comfort Suites in Fultondale, Alabama, a dynamic and growing suburb located just north of Birmingham. These assets were acquired by a related entity of Stafford Hospitality and were previously managed by H.P. Hotels, headquartered in Birmingham.
'Marketed together at a price of $18 million, this offering provided an opportunity to acquire three nationally franchised, select-service assets that are well located just north of Birmingham, Alabama,' commented Barry Swanson, Managing Director of MK's Atlanta office.
'The hotels are top performers in their market and the timing provided our client the ability to realize his targeted returns, while capitalizing on the market's momentum. Additionally, these assets fit perfectly with the purchaser's expansion plans within the region and long-term growth strategy,' said Mr. Swanson.
Ideally situated along Interstate 65, the major thoroughfare that connects Memphis and Birmingham, the 65-room Hampton Inn, the 67-room Holiday Inn Express and the recently opened 70-room Comfort Suites are expected to achieve Total Revenues in excess of $5.0 million, by year end 2006. With a combined Occupancy of more than 73% for the three properties in 2005, the historical and current performance clearly demonstrates the market's strong demand for well located, attractive, and desirable accommodations.
Birmingham is home to six Fortune 500 companies and the area's hotel industry thrives on a profusion of business-related travel. Ownership of these assets provides the ability for the purchaser to control three of the best select-service brands in the growing submarket of Birmingham, while providing opportunities to further expand with these franchises in the future.
'We anticipate continued rate increases given the strength of the market and the excellent condition of the hotels. The Fultondale properties have a tremendous earnings capacity and the purchaser can expect a very impressive return on investment, with very little additional capital required,' said Mr. Swanson.
Metro Birmingham, and specifically Fultondale, is projected to grow considerably as commercial and residential development continues. Overall, hotels located in the area should continue to experience strong room night demand in the foreseeable future.
During the last 12 months MK has structured more than $3 billion in hotel real estate transactions worldwide. For further information about this transaction and current hotel property offerings, please contact MK at 703.760.9600 or via www.mkhotels.com.
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