A Nashville, Tennessee, hotel that sold in a U.S. pandemic first in 2020 has traded again in an all-cash deal, an indicator that this year could be another active one for hospitality sales as the industry recovers from the fallout of the health crisis.
The Georgetown Co., a New York City-based private real estate investment firm, said it bought the boutique luxury Hutton Hotel in Nashville’s Midtown, its first as part of a joint venture formed last year with hotel management company First Hospitality to invest $1 billion in buying hotel properties. When the seller bought the property in June 2020, it was the largest distressed sale in the United States that month and the first of its kind to sell since the pandemic hit in mid-March.
The hotel, a 1961-era office building converted into 250 hotel rooms in 2009, is less than a mile from online retailer Amazon’s office tower in Nashville Yards, a massive development at the edge of the city’s downtown. It is also close to Vanderbilt University, two major hospitals and Music Row, the city’s famed district dotted with country music producers and recording studios.
“We like the neighborhood,” Michael Fishbin, managing director and head of hospitality for The Georgetown Co., told CoStar News.
Last year, sales picked up rapidly to finish 2021 at about $43.5 billion, topping 2019's $37.5 billion, as investors sought to ride the industry's recovery, according to CoStar data. Sales in 2020 were relatively paltry at $15.1 billion given the pandemic, which resulted in thousands of hotels sitting closed for long periods and not generating revenue. So far this month, there have been more than $1 billion in hotel sales.
A price wasn’t disclosed in the Hutton Hotel sale, and city and county haven't yet recorded the deed transfer. But it likely sold at a higher price than the selling group paid for the hotel in June 2020 while it was closed.
At the time, the real estate was picked up for nearly $60 million from Chicago-based Watermark Lodging Trust by a joint venture between BentallGreenOak, Flank Management and Geolo Capital, a firm co-founded by John Pritzker, son of late Hyatt co-founder Jay Pritzker. Including furniture, fixtures and equipment, the price was about $70 million.
Sold At Discount
Watermark, which paid a total of $73.6 million for the hotel in 2013 and invested millions more in improvements, said in a filing with the Securities and Exchange Commission that it sold at a discount. It needed to sell because its $44 million loan was about to mature, and the firm took a cash deal at a lower price than others had offered.
Representatives of the joint venture didn’t respond to questions about why they decided to sell. They originally paid cash for the property, but secured a loan through JPMorgan in October 2020 for $33.1 million.
The hotel reopened in July 2021 about two months after Nashville, a major U.S. tourist destination, fully reopened. Tourists flooded into the city and made the downtown entertainment district look like it was 2019 again, but convention business has been slower to come back.
Still, Nashville’s hotel occupancy returned to the list of top 25 largest tourism cities in the country in the fall, leading the U.S. in occupancy some weeks.
Fishbin said the Hutton Hotel did well on weekends because of leisure travelers last fall. The expectation is that the hotel will average in the mid-60% range this year, he said.
Butch Spyridon, CEO of the Nashville Convention and Visitors Corp., told CoStar News by text that, other than cancellations because of coronavirus for this month and next, “leads and bookings for the future have been" picking up and that the “future looks good.”
Atlanta-based Chick-fil-A’s annual conference that brings franchisees from around the country is still on for Jan. 30 through Feb. 3. In 2019, it drew roughly 6,500.
Over the course of 2022, Georgetown plans to renovate the hotel rooms and open the restaurant the previous owner had planned once an operator is found, which Fishbin said was a priority. “We look to be there for the long run,” he said.