What a great time it is to have access to credit or, better yet, a pile of cash. Distressed hotel inventory is stacking up across the country, and in the past few weeks we've seen a number of deals consummated at bargain prices. Yesterday, PKF Capital announced it assisted in the foreclosure sale of a 238-room Wyndham in a prime Orange County, CA location. Buyer Rosanna, Inc. paid $21 million for the hotel, a parking garage and three acres of land. At $88,000 a key, that's a steal, especially when you consider the seller originally bought the property three years ago for twice the amount.
Those equity funds, private investors and a few public entities that have been stockpiling cash during the industry downturn are now reaping the rewards of their brilliance. In the coming months, I guarantee we'll see more deals like this Wyndham transaction, and perhaps at discounts even better than the 50 percent we saw in this deal. The new owners say they'll spend more money to fix-up the property and probably re-brand it. The result, which will be repeated as other deals of this kind get done, will be a better hotel that eventually will be able to command premium rates and make a handsome profit for the owners, both on the operations and ultimately when they exit the deal.