Miami-based investor Driftwood Acquisitions and Development has made its foray into the California market with the purchase of a San Diego hotel. Driftwood acquired 353-hotel Marriott Mission Valley in San Diego for $85.7 million and plans to develop an additional 150-room hotel on the site. The investor has been looking to invest in the California market for years, but until now hadn't been able to find a hotel property that penciled, according to the company's internal underwriting standards.
“We've been wanting to get into the California Market for a very long time but we could never find hotel deals that penciled for us based on our underwriting hurdles. This time we found this great opportunity that met all our criteria,” Carlos Rodriguez, CEO of Driftwood Acquisitions and Development, tells GlobeSt.com. “As per the cycle, we look at the fundamentals of each particular market. In this case the hotel is in a great location, with a great brand, and in a market that is already strong and getting stronger.”
The Marriott Mission Valley checked all of the boxes for Driftwood. Rodriguez names the brand, box and location as the asset's attractive characteristics. “It is a great brand, great box, really good location in a strong market, and it had excess land where we could develop a second hotel,” he adds. The new hotel provides significant upside. The plan is to build a 130,000-square-foot, 150-room hotel on a 1.75-acre parcel with construction slated for 2021.
Not only does this property meet Driftwood's underwriting standards, but it also presented a good return profile for the company's investors—particularly because of the development opportunity. “Driftwood is a value creator and is opportunistic,” says Rodriguez. “We move fast when we see a deal where we can create value for our investors. We plan to have this hotel and the hotel we will build in our portfolio for a very long time. San Diego and Mission Valley are only going to get better with time.”
Driftwood is looking for more hotel investment opportunities in the California market, however, it will only acquire properties that fit its strategy and investment profile. “We are making offers on other properties in California as we speak,” says Rodriguez. “Whether we get them at the price we want them or not is another story. We need to provide the returns that our investors expect from us so we need to remain disciplined. We will pull the trigger on more California acquisitions if the price is right and we have a value creation story that goes with it.”
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Kelsi Maree Borland
