It has inked its first deal already with REIT One Inc. to build a $150-million, 268-room resort here. Best Rate Hotels is currently negotiating with Starwood Hotels to manage the property, and will own 20% of the property.
Best Rate Hotel will be contributing $30 million to the transaction, the company reported in a press release. That will leave an additional $70 million in financing to be invested between the Virginia Beach and Florida markets in the immediate term. Best Rate is planning to partner with equity providers in other transactions, although Stone would not provide the leverage percentage they might contribute. "It could range across the board and in some cases we might be 100% responsible for the note," he says.
The company is getting set to make a second announcement within a week, Stone adds, although he will not say which market it is in and if it will be another development deal or an acquisition, which the company is also willing to consider. All told, it is planning five transactions in the immediate term, two of which will be in Virginia Beach.
The firm has focused on Virginia Beach because it likes the demographics there, Stone says. "It is a great market for tourism." The company is targeting the higher end market, focusing mainly on the Starwood brands, such as Hilton and Four Seasons.
Vikram Antin, an associate with Marcus & Millichap, tells GlobeSt.com that Virginia Beach has been an underperforming market for some time but has improved over the last year. "There has been an increase in RevPAR. That is probably what is attracting them to this market."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
