Coral Gables-based Driftwood Acquisitions & Development sold its Marriott-branded, 90-room SpringHill Suites Altamonte Springs, the company’s first hotel to complete the company’s unique investment strategy.
An affiliate of Driftwood Acquisitions & Development, SHS Altamonte Springs Ltd., sold the hotel to 205 West State Road 436 LLC for $11.65 million, according to the Seminole County Property Appraiser’s office. The deal, which breaks down to $129,444 per room, closed Dec. 27.
“This transaction was a huge success. It surpassed all our expectations,” said Carlos Rodriguez Jr., chief operating officer at DAD.
Rodriguez Jr. and his father, chairman and CEO Carlos Rodriguez Sr., lead the company formed in 2015. It focuses on acquiring hotels that already have existing cash flow and upside potential, and then syndicates 90 percent of its equity ownership to accredited investors. The company also develops hotels.
The SpringHill Suites is one of the two hotels DAD bought shortly after forming and the first one to complete DAD’s investment model.
DAD bought the hotel at 205 W. State Road 436 in December 2015 for $6.75 million, according to the Seminole County property appraiser’s office.
It also purchased a Holiday Inn Express near Orlando International Airport, and both were in receivership at the time, Rodriguez Jr. said.
DAD projected a 16 percent internal rate of return on the Altamonte Springs hotel but actually yielded significantly more than what was expected at underwriting.
Rodriguez Jr. explained the company’s syndication business model.
“First off, we have to like the investment and buy with our own capital. But instead of just allowing our capital to max out at a certain amount and then wait for the sale,” DAD brings in investors, he said. “The better a hotel does, the better we do on the back end and everybody wins. That’s the added incentive for us to turn around and syndicate it to investors.”
Driftwood Hospitality Management LLC, based in North Palm Beach, will stay on as the management company of the SpringHill Suites.
DHM is a sister company to DAD and manages all of DAD’s hotels. In 2003, Rodriguez Sr.’s Cardel Group merged with DHM. Rodriguez Sr. is DHM’s executive vice president.
DAD and DHM own a percentage stake in each other, with DAD owning 25 percent of DHM and DHM owning 12.5 percent of DAD, according to Rodriguez Jr.