In the waning weeks of 2021, investors including Blackstone closed deals for hotels in urban Nashville, Tennessee, as the city’s tourism business rebounds.
Spartanburg, South Carolina-based firm OTO Development paid $66.2 million for Hyatt House, a select-service hotel near Vanderbilt University in Nashville’s Midtown, according to Nashville and Davidson County property records. The 201-room hotel sold by Songy Highroads, based in Alpharetta, Georgia, opened three years ago.
The most recent sale pushed total hotel investment sales to about $368 million, which is far from the $639 million in 2019, according to CoStar data.
When the pandemic struck in March 2020, Nashville’s tourism business, notably group and convention business, came to a standstill like most cities across the country. Hotels saw occupancy vanish at high-end properties. Economy and limited-service hotels were able to limp along with leisure travelers seeking to get out of the house.
Hotels ended up selling for a discount while others struggled to cover their debt. Chicago-based Watermark Lodging Trust, for example, sold Hutton Hotel in Nashville for a discount.
Leisure travelers returned to a reopening Nashville and the downtown entertainment district now is jammed with crowds reminiscent of pre-pandemic years. Group business is slowly coming back.
During the fall months, Nashville had weeks where it had the highest average occupancy among the 25 largest tourism cities in the country. Hotel revenues have followed the rising occupancy, helping to revive hotel values.
That may have played out in Watermark’s recent sale of Courtyard by Marriott to New York-based equity firm Blackstone for $99.6 million. A previous fund of the seller Watermark Trust Lodging Trust bought the 192-room property in 2015 for $60 million.
It was one of three properties Watermark sold to Blackstone. Blackstone bought a property in downtown Atlanta that is dual-branded as Hilton Garden Inn and Homewood Suites. In Austin, Texas, Watermark sold the downtown Hyatt Place.
New York City-based Dreamscape Cos. added to its Nashville portfolio by teaming up with San Francisco equity firm Meritage Group to buy the 230-room Holiday Inn & Suites in downtown Nashville for $74.7 million. To do the deal, they borrowed $66 million from Flagstar Bank in Troy, Michigan, for the property that opened in 2019.
In June, however, Dreamscape closed a distress sale to pay $169.7 million for the Sheraton Grand Nashville, a 482-room hotel that opened in 1975. The seller had run into difficulty with paying its loan and defaulted.
Dreamscape used it as an opportunity enter the Nashville market. Its latest deal, the company’s fifth acquisition this year nationwide, “fits squarely into our thesis to acquire assets in high-growth markets at an attractive basis,” said Scott Broder, Dreamscape Hospitality’s president, in a statement.