The per unit price puts the purchase price in the $4.7 million to $5.46 million range. The sale equates to a 12% cap rate.

"The cap rate, which some might consider aggressive for a mid-1980s constructed hotel, reflects some key market conditions," Jim Nelms, a broker with Denver-based Coldwell Banker Commercial American Spectrum, told GlobeSt.com. But he says an astute investor will find value in the Springs, about 60 miles south of Denver.

"The new supply of limited service hotels can and is being absorbed at an acceptable pace in strong commercial markets," such as in the Springs, Nelms says. "So, even markets with an abundance of new supply will stabilize over a tolerable period." He also says "there is no shortage of debt capital available for seasoned operators, with sound strategies. But more importantly, says Nelms, it follows the course of last year's predictions that "for buyers and sellers, it appears that debt will be even more affordable. This is a strong signal of ongoing acquisitions of hotels of this size."

George Andrews, McBride's vice president of operations and a principal, says his company recently has sold other hotels that is providing the funds to buy hotels such as the one in the Springs that marks the fourth acquisition in 24 months.

"After opening three new construction projects in this cycle, we are now evaluating investments in existing high-quality, limited-service hotels in strong markets," says Andrews. "This asset met the key elements of that investment strategy, especially that we feel it has tremendous upside."

Nelms adds that hotel didn't fit into Millennium's strategy, which calls for divestiture of limited-service hotels in the Regal Hotels International portfolio. The group had been purchased last year from Denver-based Richfield Holdings. Joel Hiser of PKF Advisors has represented Millennium in the transaction.

Instant Insights /

UK Owner Gets About $5 Mil for Colorado Springs' Quality Inn

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