Michael Mullenix, CEO and president of Equis, admits that the hotel cost "a lot", noting that the DC market in particular "can be tough to make sense of in terms of what properties trade for."
That said, he also tells GlobeSt.com, "This was a great deal for us in that we love the Residence Inn flag and Old Town has high barriers to entry."
Equis is in the midst of a national expansion. "We have given ourselves five years to own 5,000 rooms," Mullenix says. "Right now we are at a third of that number." The East Coast and District market is one area in which the firm is looking, he says. It might also do further business with this particular seller, which currently has additional hotel developments underway in which Equis is interested.
For its newly acquired Alexandria property, Equis will be responsible for asset managing and overseeing the hotel. Syndicated Equities, a national real estate investment company with a $1 billion portfolio, structured the financing and provided the equity for the acquisition.
The eight-story extended stay hotel features 114 studio suites, 108 one-bedroom suites and 18 two-bedroom suites. Next year Equis plans to spend $2.5 million in renovations to keep up the class A facility. Granite kitchen-tops, bathroom vanities, new televisions and a redesigned interior are some of the planned upgrades.
Mullenix says the firm is committed to the extended stay model with its low labor costs and other cost efficient synergies. "We have owned these since 2002 and they have never missed a beat. They weather economic downturns very well." Future acquisitions are likely going to be in markets in which there is a major university, a state capitol or medical center, he says.
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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.
