To meet the extraordinary demand for multifamily housing in south Colorado Springs, Austin, TX-based Shir Capital has acquired Hotel Elegante, a 496-key hotel located at 2886 S. Circle Drive in Colorado Springs. The new ownership is now embarking on a phased renovation of common areas as well as the conversion of the rooms to studio apartments over the next 24 months.
Parkview Financial provided a $42.5 million loan to Shir Capital for the purchase, redevelopment, and repositioning of the hotel. Shir Capital paid $25 million for the property, according to Capital Property Group, the brokerage firm that closed the sale. Built in 1974 and situated on 17 acres, Hotel Elegante features a conference center, restaurant, pool, and lounge.
“This dated hotel presented an ideal adaptive reuse strategy for the borrower. Ultimately, the project will help meet some of the pent-up demand for workforce housing in the under-housed and growing Colorado Springs market,” said Paul Rahimian, CEO and founder of Parkview Financial. “Shir Capital has an extensive track record of successful, high-quality hotel-to-multifamily conversions nationwide, completing and exiting 14 projects to date.”
Working within the current room layouts, the new ownership will add kitchenettes, closets, and perform upgrades to modernize the rooms. The units are approximately 350 square feet and all utilities will be included in the rent. Additionally, the 29,600-square-foot conference center will be converted into self-storage which will be run by a third party and will be available to the greater community.
The project is approximately three miles from downtown Colorado Springs and is a 15-minute drive to the Colorado Springs Airport. The apartment vacancy rate in the submarket is about 3.6% and there have been no new multifamily projects in south Colorado Springs for more than five years.
Malcolm Davies and Zack Streit of The Davies Group at Los Angeles-based George Smith Partners arranged the financing on behalf of the borrower.