From Boston to Los Angeles, developers are busy converting existing hotels to one of the hottest concepts in the lodging and real estate industries today-condominium hotels. These properties typically include mixed uses such as retail, office and even residential units. Why have they become so hot? For starters, the developer is able to pre-sell units and offset the front end costs. This also enable's them to get a higher sales price per square foot which flows back into the cash flow "pot". There are other upsides as well including the positive view from the lender's perspective. Sold units are a much more attractive way to lend and enable to developer to bring less equity to the table.
Here is a short outline of a condo-hotel model. The hotel operator rents units just like a regular hotel. The revenue generated is split (sometimes 50/50) between the owner and the developer. The developer continues to own the common spaces such as restaurants, pools, retail spaces, etc.
The full version of this article was published by Robyn Parets with the National Real Estate Investor.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment