A mid-sized office building on North Market Street could become a 136-room hotel.
Driftwood Acquisitions and Development (DAD) – a privately held investment firm specializing in the acquisition, development, and investment syndication hotel assets – plans to redevelopment a 10-story office building in Wilmington, into a 136-room IHG-branded urban hotel.
The company also plans to develop a hotel in Fort Lauderdale, FL.
The Delaware Business Timesreported the 1220 N. Market St. was the property acquired by Driftwood. A factor in the decision was the area’s status as an Opportunity Zone.
The federal program aims to spur development in lower-income areas.
The property is near another former office building at 1300 N. Market St. that was converted into a Residence Inn by Marriot suite hotel.
Both the Marriott site and 1220 building have been victims of a soft leasing market for smaller office buildings in downtown that does not have in-building parking or other amenities.
The 1220 building has been viewed for some time as a suitable candidate for conversion to apartments or a lodging facility.
After seeing nearly two decades go by without a new hotel, Wilmington is seeing a boom. The success of the Westin on the Riverfront has led to the construction of additional hotels in that area.
Downtown Wilmington is now seeing the renewed activity as is also the case down Interstate 95 on Main Street in Newark. Two hotel projects are in the works in that area.
“There’s a tremendous amount of excitement about opportunity zones and the potential tax benefits,” said Carlos Rodriguez Sr., CEO of Miami, FL-based Driftwood. “Driftwood Acquisitions & Development has specific experience that gives us a distinct competitive advantage in this space. We’re a vertically integrated real estate firm with experience raising capital, structuring deals and developing properties, which creates economies of scale, giving us the ability to execute quickly and increase returns for our investors.”
Those advantages, he continued, also include DAD’s record with the EB-5 investor program – another specialized federal program with substantial reporting requirements.
In addition to investing in the Ft. Lauderdale and Wilmington deals, the Driftwood QOF plans to look at opportunities around the nation.
“As an experienced developer and a sponsor – we maintain a 10 percent equity stake in all of our investments – we’re not going to invest in a property simply because it’s in an opportunity zone,” said Rodriguez. “The deal has to make sense regardless of the potential tax benefits. At the end of the day, opportunity zone investments require a 10-year hold period in order to maximize the tax benefits, so deals need to be underwritten responsibly.”
Since launching in 2015, Driftwood has built a portfolio that includes 18 operating hotels.