A Rochester hotel, the Microtel Inn and Suites Rochester South, sold for around $4.5 million according to public documents on the sale, released Monday.
The firm Marcus & Millichap also announced the sale of the 88-room property in a press release Tuesday. Investment specialists Jon Ruzicka, Jake M. Erickson, Jared Plamann and Joseph Ferguson facilitated the sale, according to the release. The property, the release said, received multiple offers for purchase.
“The ultimate buyer was drawn to the hotel because it provided the opportunity to acquire a recently built hotel, that had consistently generated impressive and steady pre-COVID room revenue, for well below replacement cost,” the release said.
The hotel is located at 4165 Maine Avenue SE. The price-per-room for the hotel is around $51,100.
The buyer lists itself as Yogi One LLC and has its address as the property of the hotel. According to the Minnesota Secretary of State, Yogi One also has its address listed at 820 Shamrock Lane in Albany, Minnesota, which is a Baymont at Wyndham hotel. The company was formed on Feb. 15 of this year.
Ted Leines, the CEO of Leines Hotel Advisors, said the cost of the property and its price-per-room is reasonable.
“If you were to build something brand new, you’re looking at $145,000-a-key, and a Microtel might be a little bit less than that,” he said. “But it’s very expensive to build right now, if you can even get the funding for it.”
Andrew DeZiel, a hotel real estate advisor for Timm & Associates, said the Rochester market for hotels is showing positive signs of recovery and that before the COVID-19 pandemic, the city had a lot of hotels introduced.
“Some of that is still being absorbed as demand recovers to where it needs to be, but again year-over-year I know Rochester has made some vast improvements, where it was 2021, even 2022,” DeZiel said.
Leines said that the Rochester medical scene is unique because of the presence of Mayo Clinic, which is a nine-minute drive from the sold Microtel. Leines said that the hotel market in the city is subject to what insurance companies and Medicare are dictating it will pay for hospital stays.
As for the overall state of the market, Leines noted that the hotel market is starting to improve.
“It’s not going to be as good as 2022, but it will certainly be an improvement over 2023,” he said.
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