A Canadian hotel investment group has purchased four Marriott-brand hotels developed by the Chattanooga-based 3H Group for $47 million and plans to make further investments to upgrade the lodging facilities.
American Hotel Income Properties REIT LP, a real estate investment trust based in Vancouver, British Columbia, has acquired the 109-room Residence Inn by Marriott and the adjacent 87-room TownePlace Suites by Marriott, both located on Center Street near Lee Highway and the Hamilton Place mall, along with other former 3H hotels in Jacksonville and Lake City, Fla. According to records filed with the Hamilton County Register of Deeds, the new owners paid $18.8 million for the two Chattanooga hotels near Lee Highway.
"They offered a price that was good for us and good for them," said Hiren Desai, chief executive of the 3H Group in Chattanooga. "This was good opportunity to recycle capital into other properties for us."
The 3H Co. has sold nine hotels in the past year, including six in Chattanooga. But the investment group continues to own 13 hotels and is building another six, Desai said. The Chattanooga developer also has other commercial and residential real estate projects.
The new owners said in a release they will spend $2.8 million for brand-mandated property improvement plans at the four hotels, each of which has been profitable with strong occupancy rates in recent years, officials said.
Ken Cleveland, the general manager of the Residence Inn near Hamilton Place, said the hotel staff will remain and the new management firm for the hotel will be One Hospitality Group, which is based in Scottsdale, Ariz.
"Our property is in pretty good shape, but there is going to be a renovation project in the next 12 months to keep the facility as modern and up to date as possible," Cleveland said.
The Residence Inn at Hamilton Place includes a 5,000-square-foot conference center that can accommodate up to 200 people.
Desai's group built the Residence Inn in 2009. Another Residence Inn by Marriott downtown is owned by another franchisee.
American Hotel Income Properties (AHIP) said it will be arranging mortgage financing for the newly bought hotels over the next 30 days. The mortgage will be a new commercial mortgage backed securities loan with a 10-year term and a fixed interest rate of approximately 4.5 percent.
AHIP's portfolio now consists of 84 hotels totaling 7,493 guest rooms with 39 branded hotels totaling 3,704 guest rooms and 45 rail hotels totaling 3,789 guest rooms.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.