THE PROPERTY

An 87-Key Hilton Garden Inn on Tampa Bay's Primary Retail Corridor: Acquired from Institutional Ownership with a Brand-Mandated Renovation Ahead

The property at 4052 Tampa Rd in Oldsmar, Florida is an 87-key, five-story Hilton Garden Inn built in 2006, totaling approximately 59,012 square feet of gross building area on a 1.07-acre site. The hotel operates under the Hilton Garden Inn flag, an upscale select-service brand within the Hilton portfolio, and is located along Tampa Road, the primary retail corridor in Oldsmar and a portion of Florida Route 580, equidistant between Tampa and Clearwater. Property amenities include an outdoor pool, fitness center, business center, and meeting rooms, with approximately 200 parking spaces providing roughly 2.3 spaces per key.

The property had been held by a major institutional real estate owner since 2018, during which time approximately $2.6 million was invested into the asset. The disposition was part of a selective divestiture of hospitality holdings, and the acquisition provided the acquiring sponsor with a well-located institutional asset at a basis of $12,000,000, or approximately $137,931 per key. At the time of acquisition, the hotel's Hilton Garden Inn franchise agreement required completion of a property improvement plan in order to be renewed, with an estimated cost of approximately $1,000,000. Completion of the PIP would enable the sponsor to execute a new 15-year franchise agreement with Hilton, extending the brand affiliation and materially improving the long-term value of the asset.

THE RRA SOLUTION

$7,800,000 First-Position Acquisition Bridge Loan with a $1,000,000 PIP Holdback Structured to Finance Brand Renovation at Closing

RRA provided a $7,800,000 first-position acquisition bridge loan closing November 21, 2023. The loan included $6,800,000 of initial funding at close, with the remaining $1,000,000 structured as a holdback available to the sponsor for capital expenditures associated with the Hilton-mandated property improvement plan.

The PIP holdback provided the sponsor with a fully committed, available source of capital to fund the brand renovation on a draw basis without requiring the full cost of the improvement program to come out of pocket at closing.

THE BUSINESS PLAN

Complete a Hilton-Required Property Improvement Plan, Execute a New 15-Year Franchise Agreement, and Transition to Local Management

The sponsor's plan at acquisition was to begin the property improvement plan immediately after closing and complete the renovation within the first year of ownership, positioning the hotel for a new 15-year franchise agreement with Hilton that would extend the brand relationship for the foreseeable future. The PIP addressed both physical plant deficiencies and brand-standard updates across the hotel's public spaces, guestrooms, and food and beverage areas. In parallel with the renovation program, the sponsor planned to transition property management from the prior operator to a local management company with greater operational flexibility and the potential to improve efficiency across the hotel's cost structure.

The sponsor executed the renovation program on schedule and secured the new 15-year Hilton Garden Inn franchise agreement upon completion. Notably, the sponsor self-funded the renovation without drawing on the $1,000,000 PIP holdback structured into the RRA loan, reflecting both the strength of the sponsor's balance sheet and the speed at which the capital program was completed. With the renovation finished, the franchise agreement in place, and operations transitioned to the new management team, the sponsor refinanced the property and paid off the RRA loan in full on August 30, 2024, approximately nine months after origination.

THE MARKET

The Tampa Bay Hospitality Market: One of the Fastest-Growing Metropolitan Areas in the United States, with Continued Revenue Growth and Positive ADR Trends

The property is located in Oldsmar, Florida, a suburban community within the Tampa metropolitan area approximately 14 miles northwest of downtown Tampa and 19 miles north of St. Petersburg. The Tampa metropolitan area is the 17th largest metro in the United States, with approximately 3.2 million residents and population growth of 14.1% between 2010 and 2020. The region is characterized by a low cost of living, no state income tax, year-round weather, and a diversified employer base that has attracted significant corporate relocation and expansion. At least 14 companies relocated headquarters or expanded regional operations in the Tampa Bay area since 2020. Major employers in the immediate Oldsmar area include Nielsen Media Research and Lockheed Martin, providing a durable commercial demand base for the property.

Within the Tarpon Springs/North Shore Hospitality Submarket, the market totals approximately 3,900 rooms across 50 properties. At the time of loan origination, submarket occupancy averaged 66.9% over the trailing 12 months. Despite some occupancy softening following the post-pandemic recovery period, revenue levels remained stable through continued average daily rate growth. RevPAR increased an average of 9.8% year-over-year over the trailing 12 months at origination, and average daily rate grew 5.7% in October 2023 relative to the prior year, providing a supportive revenue backdrop for the property's renovation and repositioning.

THE SPONSOR

An Experienced Hospitality Operator with Decades of Investment and Management Experience in the Select-Service Hotel Sector

The sponsor is an experienced hospitality real estate investor and operator with a track record spanning multiple decades across the select-service and upscale hotel sector. The acquisition of the Hilton Garden Inn at 4052 Tampa Rd was sourced through institutional broker relationships and structured to take advantage of a motivated institutional seller's selective portfolio disposition. The sponsor brought direct hospitality operating experience to the asset, including familiarity with Hilton brand requirements, the ability to manage a property improvement plan on a defined timeline, and the operational capability to execute a management transition while maintaining property performance.

The sponsor completed the renovation and secured the new 15-year Hilton Garden Inn franchise agreement without drawing on the $1,000,000 holdback that RRA had structured into the loan for that purpose. Self-funding the improvement program reflected the strength of the sponsor's balance sheet and the pace at which the capital program was executed. The speed of the business plan execution, from acquisition through renovation, management transition, and payoff, resulted in a full retirement of the RRA loan in approximately nine months, well inside the two-year initial loan term.