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PORTLAND-Larkspur Hotels LLC of Corte Madera, CA is in escrow to acquire several assets in Portland’s RiverPlace district, including the 84-room RiverPlace Hotel, from the Seattle-based investment partnership that developed the project in the mid 1980s. The transaction is expected to close in July.

The other pieces of the acquisition include the 39,000-sf RiverPlace Office Building, the 207-slip RiverPlace Marina, 147 parking spaces and the 20,000 sf Esplanade shopping plaza, which houses McCormick and Schmick’s Harborside Restaurant. Other retail space in the project includes the Lucere Restaurant in the hotel and a floating Newport Bay restaurant.

The parties involved aren’t making the acquisition price public prior to closing. In March, Larkspur announced it had raised $107 million of new capital in a $90 million first mortgage provided by Greenwich Capital Management and $17 million in preferred equity financing. Larkspur says it is using the long-term financing “to make the RiverPlace Hotel the first of several planned acquisitions towards building a portfolio of independent, differentiated hotels.”

The seller is RiverPlace Associates LLC, which is an investment vehicle of BBS Holdings Ltd., a Seattle-based operation owned by its three principals, Blake Beyeler, Melvin Brady and Tom Sasaki. BBS Holdings Ltd. is the holding company for InterPac Development Inc., InterPac Management Inc., BBS Business Services Inc., RiverPlace Management Inc., Northwest Club Management Inc. and BBS International Inc.

BBS International, a real estate development, investment and management services company, developed RiverPlace with Cornerstone Development Co. RiverPlace Management was formed in 1998 as the Managing Member and part owner of RiverPlace Associates LLC, the owner of the RiverPlace assets that are being sold to Larkspur.

“It is difficult to let go of this property given our personal interest and years of successful management,” said Brady in a prepared statement. “However, we believe that our choice of Larkspur is excellent in order to continue the high standard we have established for this high profile location.” Neither Melvin Brady nor a source with Larkspur could be reached for comment on Wednesday.

The transaction was brokered by Ed Dundon of The Dundon Co., a Portland-based hotel brokerage company. Dundon tells GlobeSt.com there’s been a “fair amount” of hotel investment activity in the Portland market as of late, as there has been more interest by owners in selling and more interest by buyers who are betting the Portland market is at its bottom and values will again start to rise with a turnaround. Dundon says there hasn’t been much activity over the past few years because owners have been holding out, hoping the hotel market would turn around and they could sell for a higher price. It has yet to do so, however, says Dundon, and some owners now have to sell for one reason or another. “You try to time the market, but sometimes you can’t wait,” says Dundon.

Hotel occupancies and RevPAR have been declining since 1998, says Dundon. In the mid-1990s, average occupancies were in the 70% range, which prompted a flood of new hotels adding thousands of rooms to the market. Over the 12-month period ending March 31, 2003, average occupancy in the 25,000-room Portland MSA was 56.3%, barely above what PriceWaterhouseCoopers recently determined was the breakeven point for hotels.

The situation has all but halted the development of new hotels in the region. In a late April update on the local hotel market, Dundon reported that only one hotel is under construction in the region and only one of three hotels that in the planning stage has a firm construction start date, which is good news for the eventual rebound. “The lack of new rooms coming on the market will provide further strength to the market recovery as the general economy improves,” states Dundon in his semi-annual market update.

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