HOUSTON-Boxer Property moved into the field of hospitality investment buy acquiring the 584-room Pointe Hilton Tapatio Cliffs Resort in Phoenix from servicer C-III Asset Management LLC. The local investor plans capital investment to bring the property back to profitability.
“We’re going through the capital budget requires that Hilton made and trying to get our arms around what needs to be done,” explains David Kayle, who heads up acquisitions for Boxer Property. “There were some significant upgrades done to the property before our involvement, but capital is one thing hotels need on a consistent basis to keep them fresh.”
C-III Asset Management took possession of Pointe Hilton Tapatio Cliffs Resort at 11111 N. 7th St. in late 2010, after the resort’s former owner defaulted in a $55 million loan and no one bid on the property at a December auction. The property’s former owners, Highland Hospitality Corp. had paid $85 million for the resort in 2006.
Kayle tells GlobeSt.com that Boxer Property had its eye on the asset, which was widely marketed by Eastdill Secured, for about a year. “We felt that, in looking at it, we could bring it back to profitability, and bring it back to first-class status,” he explains. “It’s always been an iconic place.”
He goes on to say that Pointe Hilton, which will continue under the Hilton flag, provides an ideal launching pad for Boxer Property to move into hospitality investment. “We’ve been waiting for an opportunity to kick off that side of the business and now we hope to pursue other resort investments,” he notes.
The investment sweet spot for the company is value-add or distressed properties, and Kayle says there are a number of those properties out there. The goal isn’t traditional hotels or motels, but rather, irreplaceable and unique projects. “The Hilton is such a unique property in a beautiful spot,” Kayle says.”
Boxer is no stranger to value-add opportunities. The company has been around for about 20 years, and has become expert in acquiring office buildings with value-add potential, then turning them around through aggressive leasing and boosting operations.
“We buy value-add office buildings based on discount-to-replacement costs,” Kayle pointes out. “If you can walk into a situation like that in hospitality, it’s a natural fit, especially based on the offering memorandums from resorts that are on my desk.” Many of those offerings involve properties that were over financed, similar to the situation with Pointe Hilton Tapatio Cliffs Resort. “There’s a great opportunity to go in there and buy a hospitality property at a discount to replacement cost, bring capital and great management to the operation, and make a go of it from an income standpoint,” Kayle says.