10 Story Vacant Office to Courtyard by Marriott Conversion

An investor identified a vacant 10 story office building in downtown Temple, Texas as a conversion opportunity. The building had been empty for over two years after its primary tenant relocated, and the owner was motivated to sell. The plan was to acquire the property and convert it into a Courtyard by Marriott, capitalizing on Temple's healthcare-driven demand from Baylor Scott & White Medical Center, the largest employer in the region, and steady visitor traffic from Fort Cavazos, one of the largest military installations in the United States. The building's concrete and steel construction, floor plates, and elevator infrastructure made it structurally well suited for a hotel conversion without a full teardown.

10 Story Vacant Office to Courtyard by Marriott Conversion

Deal Summary

Building: 10 Stories
Loan Amount: $7.4M
Lender: Private
Strategy: Office-to-Hotel

The Situation

An investor identified a vacant 10 story office building in downtown Temple, Texas as a conversion opportunity. The building had been empty for over two years after its primary tenant relocated, and the owner was motivated to sell. The plan was to acquire the property and convert it into a Courtyard by Marriott, capitalizing on Temple's healthcare-driven demand from Baylor Scott & White Medical Center, the largest employer in the region, and steady visitor traffic from Fort Cavazos, one of the largest military installations in the United States. The building's concrete and steel construction, floor plates, and elevator infrastructure made it structurally well suited for a hotel conversion without a full teardown.

The Challenge

Vacant office buildings are among the hardest assets to finance. The property had no income, no tenants, and no operating history that a lender could underwrite against. The conversion budget required significant capital for room buildouts, mechanical system upgrades, and brand-standard finishes mandated by Marriott. Most conventional lenders declined the deal outright because they could not underwrite to a projected income stream on a property type conversion in a secondary market. The borrower also needed to close quickly to secure the purchase price before competing interest from other developers emerged.

The Structure

CapitalAx arranged a $7,400,000 bridge loan through a private lender with deep experience in hospitality conversion projects. The loan was structured with interest-only payments to cover acquisition and pre-development costs, with a term that aligned to the projected conversion timeline. The bridge included holdback provisions for pre-construction soft costs, architectural planning, and Marriott franchise application expenses. The structure gave the borrower breathing room to secure the franchise agreement and construction permits before transitioning into a separate construction financing phase.

The Solution

CapitalAx positioned the deal around Temple's unique demand drivers that set it apart from typical secondary markets. Baylor Scott & White's flagship hospital generates consistent medical travel from patients, families, and visiting physicians year round. Fort Cavazos drives steady transient demand from military families, contractors, and government visitors. CapitalAx presented occupancy data from existing Temple hotels showing consistently high demand with limited branded select-service inventory downtown. A private lender with hospitality conversion experience reviewed the franchise application materials, architectural plans, and demand study, and funded the acquisition based on the strength of the market fundamentals and the borrower's development track record.

The Outcome

The borrower closed on time, securing a landmark downtown property for the Courtyard by Marriott conversion at a favorable basis relative to ground-up construction costs. The acquisition price reflected the building's vacant condition, giving the borrower a significant cost advantage over building a comparable hotel from scratch. The project is designed to add branded hotel inventory to a market with strong institutional demand drivers and limited competition, positioning the asset for strong stabilized performance once construction is complete and the Marriott flag is active.