Meridian Arranges $54M for New Pod Hotel
- Mar 30, 2018
Meridian Capital Group has helped pave the way for a new micro-hotel to hit the market in Philadelphia. Acting on behalf of development partners Modus Hotels and Parkway Corp., the commercial real estate finance and advisory firm recently arranged $53.5 million in construction financing for Pod Philadelphia, a 252-key micro-hotel.
Pod Philadelphia will pop up at 31 S. 19th St., smack in the middle of Center City. The 11-story tower will be the first property in Philly to fly the Pod flag. The 11-year-old micro-hotel brand focuses on providing guests with tech-centric boutique hotels emphasizing smaller rooms—efficiently-designed chambers ranging from 60 to 120 square feet—and vibrant communal spaces in premier locations.
“This is evidence that good deals, with good sponsors, can get done in this difficult construction financing environment,” Adam Gollance, CFO of Modus Hotels, said in a prepared statement.
Meridian landed a 36-month, non-recourse construction loan for Pod Philadelphia. “Our success on this transaction was primarily due to Parkway and Modus’ stellar reputation built over decades,” Morris Betesh, senior managing director with Meridian Capital Group, said in prepared remarks. “Meridian was able to source a new capital provider to the market and use the firm’s collective knowledge to negotiate competitive terms for the client.”
The Pod Hotels portfolio is quickly expanding. Currently, there are three Pods in Manhattan, including Pod Times Square, another in Brooklyn and the newest capsule hotel is located in Washington, D.C. “The urban micro concept is still a new one, but some of this trend is being driven by rapidly rising construction costs—smaller rooms make the development returns more attractive,” Michael Bellisario, senior research analyst with financial services firm Robert W. Baird & Co., told Commercial Property Executive. “Also, in New York City, for example, guests don’t spend much time in their rooms, so why do you need large, lavish rooms when you’re really only sleeping in them?”
Pod is just one of a growing group of new boutique micro-hotel brands. Other players in this niche lodging segment include CitizenM, Tommie Hotels and Yotel. Big names are in the game, too; Marriott launched its Moxy brand in 2014.
“Demand for boutique/lifestyle hotels is high. The big brand companies recognize this, and they’ve introduced a handful of soft brands over the years to keep up with changing customer preferences,” Bellisario said. “Often, especially in urban markets, customers are looking for a hotel with a local feel and an environment that is fun and unique.”
Renderings courtesy of Modus Hotels