ORLANDO, Florida—The Kessler Collection intends to put the funds received from its sale of a three-hotel portfolio to work bulking up its portfolio.
Inland American Real Estate Trust in September announced it was acquiring three properties—the Grand Bohemian Hotel in Orlando, Florida; the Bohemian Hotel Savannah in Savannah, Georgia; and the Bohemian Hotel Celebration in Celebration, Florida—from Kessler.
The Bohemian Savannah deal closed in August with the Grand Bohemian hotel in Orlando expected to close by the end of the year; the Bohemian Celebration is expected to close in January 2013. Terms of the deal were not disclosed.
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Brian Py Kessler |
Brian Py, senior VP of investments and finance at Kessler, said the company will use the sale proceeds to aid its hotel development efforts. Kessler, which has nine hotels in its portfolio, is eyeing at least half a dozen development opportunities, though he said that is a conservative number.
“We’re looking to redeploy the funds back into our development base,” he said.
Development strategy
Kessler’s development strategy is to build around what Py described as the “Southeast wheel” of hotels the company currently has. This wheel includes properties in North Carolina, Georgia, the company’s home state of Florida and a 100-room Grand Bohemian Hotel in Mountain Brook, Alabama.
“We have a site in Atlanta and other various markets,” Py said. “That’s the hub of the wheel.”
The company is also looking to “build its base in the (U.S.) West,” he said. Kessler’s presence in that region today comprises two properties in Colorado and a hotel in New Mexico.
Kessler is known for its 4- and 5-diamond boutique-style properties. And with this focus on the higher end of the chain scale, Py added the company also looks closely at regions that can support an average daily rate of $200. Development sites in “high-end, historic markets” are also being sought.
It’s also important that these markets are a destination for strong group demand, he said.
“We’ve had great success in delivering our product within (those) markets,” he said.
“We’re looking at numerous opportunities,” he added. “It could take a little while. Historically, our focus has been that we tackle things that other people won’t.”
Kessler intends to be under construction with three new properties by the second or third quarter of 2013, Py said. And though the hotel debt market has been shaky at times during the past several months, he is confident financing will come through to help support the construction as Kessler leverages its existing relationships with lenders.
“We’re having good discussions with people on that side,” he said.
Py also said the company would be open to considering acquisition deals, though the focus will be on new development. As with development projects, a potential acquisition likely would take place in a high-end market. And Py said a hotel transaction also could involve the acquisition of a non-hotel space as an adaptive reuse project that would then be “Kessler-ized.”