WALNUT CREEK, CALIF. — A consortium of private investment groups affiliated with real estate investor and developer Mark Hall, CEO of Walnut Creek-based Hall Equities Group and Zenith Asset Co., has acquired 29 hotels and the corporate assets of Duluth, Minn.-based hotelier ZMC Hotels. The purchase price was not disclosed.
The 29-hotel portfolio is disbursed throughout the country, with five hotels located in Scottsdale, Ariz. All of the hotels will be master leased to and managed by Zenith Asset Co. Following this acquisition, Zenith’s total hotel portfolio will consist of 4,000 rooms in 34 properties.
ZMC Hotels owns and operates both private label boutique hotels, as well as those licensed by brands including Hilton, Marriott, IHG and Wyndham, and employs 1,000 people. ZMC Hotels is a third-generation family business previously owned and operated by the Goldfine family of Duluth.
Hall intends to retain certain senior ZMC Hotels management staff located in Duluth, Minn.; Kansas City, Mo.; and Scottsdale, Ariz., but will consolidate accounting and construction functions at the headquarters of Hall Equities Group and Zenith Asset Co.
Hall plans for more than $40 million in immediate capital investment improvements and upgrades within the ZMC Hotel portfolio. Zenith also has plans to build several new hotels.
“We are pleased our investor groups have the opportunity to acquire the ZMC operating platform and all 29 of the company’s hotels, together with several sites for additional hotel expansion projects,” says Hall. “We have had a few hotel investments over the last ten years, but with this acquisition we will now be able to include hospitality product in our portfolio of investment opportunities in a more significant manner.”
The combined portfolios of ZMC Hotels and Hall Equities Group now total nearly 10 million square feet of income property in 140 properties in 16 states.
Equity financing for the transaction was derived from a variety of sources, including the sale of three properties by the Hall Equities-sponsored investment groups, cash on hand and the refinancing of two multifamily apartment buildings. Wells Fargo Bank and J.P. Morgan Chase & Co. handled the refinancings. Bank of America provided hotel purchase money financing.
Properties sold by Hall Equities sponsored investment groups include Monte Vista Crossing in Turlock, Calif.; The Arroyo luxury apartment complex currently under construction, and the U.S. Bank Building located at 2890 North Main Street, both located in Walnut Creek, Calif.
Hall Equities Group has investments in multifamily apartments, office buildings, retail centers, industrial space, self-storage, medical and life science real estate, residential subdivisions and hospitality.
— Katie Sloan