SALT LAKE CITY, UT—Alex Brown Realty, Inc. (ABR), in conjunction with PEG Development (PEG) and Blue Diamond Capital (BDC), plan to develop two hotels, a structured parking garage and mixed use retail on a 3.26 acre development site in downtown Salt Lake City.

ABR Chesapeake Fund IV, a value-added real estate fund sponsored by ABR, invested $7.5 million in the venture.

The site is at the southwest corner of West 100 South & South 300 West, adjacent to the Energy Solutions Arena. The 19,911 seat arena is home to the Utah Jazz professional basketball team and hosts numerous events throughout the year. In addition, the site is located one block west of the 679,000 square feet Salt Palace Convention Center and three blocks west of Temple Square, Salt Lake City's biggest tourist attraction. City Creek and Gateway, two of the most prominent Salt Lake City retail centers providing approximately 1.5 million square feet of retail shopping and dining, are located within walking distance of the site.

The project will be built in two phases. Phase I will consist of a 159-room extended-stay Hyatt House hotel and a 349-space structured parking garage. This will be the first urban Hyatt House in the Hyatt portfolio. The ownership group secured a $19.4 million construction loan from U.S. Bank for Phase I. Prior to commencing construction, the joint venture will complete an environmental remediation of the site in accordance with plans approved by the Utah Department of Environmental Quality and the U.S. Environmental Protection Agency. Phase II will consist of a 175-room select-service new urban Courtyard by Marriott hotel. Both hotels will feature ground-level retail and the parking garage will accommodate hotel guests as well as event parking for the Arena and convention center. The joint venture anticipates a fall 2014 opening for the Hyatt House Hotel and a spring 2015 opening for the Courtyard by Marriott. Rimrock Construction of Draper, Utah is the General Contractor for the joint venture with Beecher Walker Architects of Holladay, Utah as the project architect. Lodging Dynamics of Provo, Utah, will manage both the Hyatt House and Courtyard by Marriott.

PEG Development and Blue Diamond Capital acquired the site in September of 2011 and have since received all necessary approvals to begin construction. “We are thrilled with the location of this project – with its ease of access to the City's improved public transportation, and other Salt Lake entertainment, business function and retail amenities,” said Cameron Gunter, PEG's founder and managing member. “We have a very strong ownership group and the City has been very helpful over the past couple years in making this project come together.”

Based on data provided by PKF Consultants, supply in the Salt Lake metro area increased by 2.3%, while demand increased by 6.3% since 2009. “We see a real opportunity in the market for new hotel rooms,” stated Gunter.

“This project represents an attractive opportunity to develop and subsequently own two high-quality hospitality assets in an excellent infill location,” said Tom Burton, ABR's chief investment officer. “We have a strong development partner in PEG Development and an outstanding hotel operator in Lodging Dynamics and we look forward to leveraging their expertise to achieve a strong return on our investment.”

Instant Insights /

Alex Brown Partnership to Develop Two Hotels Near Arena

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