In one of the largest commercial real estate transactions along the Gulf Coast in the past five years, a Boca Raton investment firm and a Chicago financial partner have acquired the Grand Hyatt Tampa Bay and adjacent Bayport Plaza office building for $226 million.
In the wake of the deal for the 444-room upscale hotel and 11-story office building, IP Capital Partners of Boca Raton and GEM Realty Capital Inc. are expected to embark on a major renovation and marketing plan aimed at better integrating the two properties.
“We think the overall product put together is superior to any other in the marketplace,” says Jason Isaacson, IP Capital’s president. “This real estate is more special than perhaps anything we’ve ever purchased in the past, and it’s one of the most exciting projects I’ve ever been involved with.”
IP Capital intends to expand the Rocky Point/Westshore Business District hotel’s 33,000 square feet of meeting space and upgrade the 265,976-square-foot office building’s lobby, bathrooms and common areas through a “heavy” capital investment, Isaacson says.
“Our job is to integrate these two properties in a way that’s never been done before in Tampa Bay,” Isaacson says. “And we’ll do that through a capital investment and by leveraging the components that are already there.
“We have an opportunity to take something that’s already stellar and create a homogenous hospitality and concierge high-touch experience. If we can execute our plan, the hotel will play off the office space and visa-versa, integrating the components of each to create a better whole.”
Bayport Plaza, completed in 1984, is currently 92% occupied. The Grand Hyatt was completed two years later. The waterfront hotel’s current amenities include a trio of food and beverage outlets, a pair of tennis courts, a 24-hour fitness center and a resort-style swimming pool.
IP Capital and its partner acquired the two properties from UBS Realty Investors Inc., of Hartford, Conn., according to Hillsborough County and state records.
UBS purchased the office building, at 3000 Bay Point Drive, in 2003 from Aetna Life Insurance Co. for an estimated $50 million. The investment firm bought the adjacent 14-story hotel seven years later from Hyatt Hotels Corp. for $58.5 million, according to a Hyatt Hotels press release announcing the sale.
Commercial real estate brokerage firm JLL negotiated the transaction on behalf of UBS, from in a Holliday Fenoglio Fowler (HFF) legacy deal.
The firm’s Preston Reid and Wyatt Krapf led the hotel sales effort, after former Senior Managing Director and head of HFF’s Hospitality Group Daniel Peek departed in late May.
Hermen Rodriguez, a JLL senior managing director, led the sales effort for Bayport Plaza.
JLL’s Chris Drew and Maxx Carney arranged acquisition financing for IP Capital and GEM, according to the brokerage firm.
JLL’s Reid notes that the Grand Hyatt should benefit from continued strength in Tampa’s tourism industry and a $2.64 billion expansion and renovation occurring at Tampa International Airport that is slated to result in increased flights and new air travel markets.
The hotel was valued at $145 million for the purpose of the sale, while the office building sold for $80.8 million.
Combined, the sale represents the largest commercial real estate transaction in the Tampa Bay area of 2019 and one of the largest Gulf Coast acquisitions of the past five years.
Other major sales since 2015 include the $214 million deal for the Don CeSar Hotel & Resort on St. Pete Beach in 2017; the $239.6 million purchase of the Mercato office and retail complex in Naples in 2015; the $198 million Hyatt Regency Coconut Point Resort & Spa last year; the $193.5 million transaction for the Bank of America Plaza office tower in downtown Tampa in 2015; and the LaPlaya Beach Resort & Club, also in Naples, which sold for $185.5 million in 2015.
Separately, the hotel deal ranks among the largest sales of the past year, eclipsed in price only by the Vinoy Renaissance Resort & Golf Club, which sold in August 2018 for $180 million.
The Bayport Plaza deal also ranks as one of the largest transactions in the Tampa area of the past year in the office sector. Only Starwood Capital Corp.’s $143.1 million purchase of the two-building Urban Centre in the Westshore area and Banyan Street Capital and Oaktree Capital Management’s $110 million deal for the 38-story Tampa City Center have been larger.
The acquisitions continue a string of office purchases in Tampa’s Westshore area by IP Capital, which was formed in 2012.
In addition to Bayport Center, IP Capital also owns the eight-story Westwood Center and the 13-story Airport Executive Center, and nine buildings that once belonged to Parkway Properties in Westshore. In 2015, it also bought the seven-building Center Point Business Center from MetLife.
The company also once owned the 19-story office tower at 501 E. Kennedy Blvd. in downtown Tampa.
“We’re big believers in the Tampa market, particularly Westshore,” Isaacson says. “Here, by adding Bayport and the Grand Hyatt to our portfolio, we believe we’ve bought one of the most iconic assets in all of Tampa. It’s fantastic real estate both locationally and aesthetically.”