First-Time Hotel Buyer Lands 348-Room Sheraton

The Sheraton flag stays; the Interstate Hotels & Resorts Inc. management has handed in the keys to 1241 W. Mockingbird Lane. The Dallas buyer, with an experienced hospitality team at his side, is planning a hands-on approach for a repositioning play in a recovering hospitality industry, Robert Wiemer, vice president in Houston for the Tampa, FL-based Plasencia Group Inc., tells GlobeSt.com.

Wiemer says the property sold for a price "fairly close" to 80% of the $10-million ask. The new owner obtained acquisition and rehab financing on his own in an all-cash transaction for MeriStar. About $2 million will go into upgrades. "It's an older hotel and older hotels will have some issues, but this is in relatively good condition," he says of minimal deferred maintenance and some added requirements with the new 10-year licensing agreement with Sheraton Hotels & Resorts. The Dallas Central Appraisal District assesses the 30-year-old hotel at close to $7 million.

The under-the-radar-screen buyer didn't have the top price on the table, but was "selected on our view of his ability to consummate the transaction in a timely fashion," Wiemer says of an industry newcomer who's been searching for the right hotel asset for a couple years. "He understands the market. He knows Dallas very well and felt Brookhollow has been beaten down somewhat as the market recovers."

The Washington, DC-based MeriStar acquired the Sheraton Brookhollow in 1997 in a portfolio buy. It went up for sale in August 2003 with a 55% average occupancy and $85 average daily room rate. The property, like its peers, posted steady declines on numbers from 1999 through 2002. But, Wiemer stresses, "it's a good box in a good location in a city that's clearly been challenged ... but Dallas is a cyclical city."

According to Wiemer, MeriStar has been strategically pruning the portfolio in all major cities to eliminate cross-over holdings. Three months ago, MeriStar sold the 305-room Radisson-Brookhollow at 1893 W. Mockingbird Lane. Its only Dallas asset is now the 289-room Renaissance Dallas North at 4099 Valley View Lane.

Wiemer says the Sheraton's location was the drawing card: 4.1 acres at the northeast corner of Mockingbird Lane and Stemmons Freeway and close to Love Field, Dallas Market Center and Southwestern Medical Center. In trade talk, that means the hotel has "appeal to the full demand spectrum," Wiemer says of the marketability for leisure to corporate travel. The Internet-wired, full-service hotel has 16,000 sf of meeting rooms, seven breakout areas, two ballrooms, a restaurant, health club and a 13-story main tower for the 348 rooms, which includes 90 suites.