Sage Hospitality Resources of Denver will manage the hotel at 1600 S. 52nd St., which will maintain its Sheraton brand and remain a Starwood Hotels & Resorts Worldwide Inc. franchise. The hotel's current occupancy is 72% and its average daily room rate, $105. Tristin Lim, trends coordinator with PKF Consulting's Los Angeles office tells GlobeSt.com, that the submarket's occupancy is 78.8% and ADR is $100.96, up from 74.96% and $92.76 in 2005. "That submarket is doing very well," Lim adds.
The hotel most likely will see an increase in occupancy when renovations are complete. "We plan a full renovation of the rooms, the corridors, the function and meeting space," says Devin Chen, vice president in fund investment management with JER Partners, "and we'll work on the exterior, repaint the building and put up new signage." Chen says the renovation will be complete by late 2007. JER Partners typically has a three- to five-year hold on its properties.
"This is our tenth investment with Sage Hospitality and our first hospitality investment in Arizona," says Alex Gilbert, principal in fund investment management with JER Partners. "We continue to look for assets where we can either redevelop or re-brand. This is obviously an asset that we can redevelop." Gilbert says nothing else is under contract, but JER Partners is continuing to search for acquisitions of all product types nationwide.
Kevin Holt, president with Phoenix-based Holt Advisory Group, says the new buyers are getting a hotel in a good location. "It's located in a little cluster of hotels southeast of the airport and just north of I-10," he adds. "There's a good concentration of commercial space to the north of it too."
Holt says investors like JER do well with hotels in their portfolios because they can respond quickly to fluctuations in the economy. "With retail properties, you can't increase rent immediately overnight," he says. "You can raise room rates in a hotel more quickly."
Rob Koger of Molinaro & Koger's McLean office represented the seller. JER Partners was self-represented.
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