In less than three years, New York City-based GFI Capital Resources Group, Inc. more than doubled its investment in the Hilton Garden Inn Detroit Downtown.
GFI reports it has sold the 10-story 198-key hotel property for $59 million to Inland Realty Group. GFI purchased the property in October 2016 and in 2017 delivered $4 million in capital improvements. GFI acquired the Downtown Detroit hotel property for $25.6 million in 2016, according to a report in Crain’s Detroit Business. The deal was the first investment in the Detroit market for GFI Capital.
“We saw an opportunity to renovate and reposition this property as a premier hotel in Downtown Detroit,” says Allen Gross, chairman and CEO of GFI. “The area is undergoing a major development resurgence and along with that has come a steadily expanding hospitality market. When we saw lodging demand rising even with increased supply, we decided to invest in an ideally located asset that is a highly attractive option for both business and leisure guests.”
From GFI’s acquisition through the end of 2018, the Hilton Garden Inn’s year-over-year occupancy, average daily rates, and revenue per available room (RevPAR) grew by 17.1%, 12.8% and 32%, respectively. The hotel’s growth surpassed—but also aligned with—that of the greater Downtown submarket, which saw its RevPAR increase by approximately 11.4% over the same period, according to the CBRE brokerage team behind the sale.
GFI notes that the hotel is situated blocks from Campus Martius Park and the CBD’s 16.8 million square feet of commercial office space. The Hilton Garden Inn is within walking distance of the city’s largest developments, extensive corporate headquarters, and most frequented leisure amenities—including museums, theaters, upscale casinos, and all three professional sports arenas.
The hotel site is located within a designated Opportunity Zone and has tremendous growth potential, the firm adds. It includes a 30,000-square-foot parcel of land that currently serves as surface parking but is large enough to accommodate the future development of another hotel of comparable size, multifamily housing, office space, or structured parking—all of which are in demand in Downtown Detroit.
Management of the Hilton Garden Inn will be transferred from Crescent to SuperHost Enterprise, which operates 18 properties throughout the Midwest and in Texas, Colorado and Virginia.
GFI affiliates GFI Hospitality, LLC and GFI Development Company, LLC have developed and repositioned a number of iconic lifestyle hotels, including The Beekman, a Thompson Hotel, Ace and James Nomad in New York, the Ace Hotel & Swim Club in Palm Springs, and the Old No. 77 Hotel & Chandlery in New Orleans. The companies are currently developing hotels in Brooklyn, NY, Denver, Colorado and Kansas City, KS.