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PORTLAND-Townhouse developer Marty Kehoe confirmed Tuesday that he is in escrow to acquire the Governor Hotel and the connected Princeton Building from Governor Hotel Associates LLC and mortgage holder Goldman Sachs for approximately $15 million.

The landmark 100-room hotel in Downtown Portland and the connected 54,000-sf office building are located on 10th and 11th Avenues at Alder Street, respectively. Kehoe tells GlobeSt.com he has not decided whether he will take on investment partners and also hasn’t decided whether or not he will break up the two properties and re-trade one of them. Neither of the buildings has any significant seismic or structural issues.

Kehoe says the hotel has solid occupancy and rates and has the most extensive meeting room facilities of any hotel in the city and one of the best restaurants in Jake’s Grill, which is owned by McCormick and Schmick’s Seafood Restaurants. “When you’ve got Bill McCormick and Doug Schmick on the ground floor of your property, you’ve got a solid winner,” says Kehoe.

As for the Princeton Building, Kehoe says the first step will be to find a retailer for the corner of 11th and Alder. The next step will be to find a fitness operation to backfill the Nelson’s Nautilus now operating in the basement of the building, which includes a pool, sauna, steam room and hot tubs to complement the weight room, exercise room and indoor running track. Nelson’s Nautilus is relocating in about a year to a nearby building that is being renovated.

The acquisition is a significant one for Kehoe, whose investment portfolio consists of about one million sf of industrial and retail space in Washington, Oregon and California. Kehoe says he’s made larger purchases, but the Governor Hotel and the Princeton Building will be the most well known structures in his portfolio. “They’re visible and in my backyard, so I’d better not do something stupid with it,” quips Kehoe.

Both sides of the transaction are being brokered by Ed Dundon of Dundon & Co., a local brokerage firm specializing in hotel transactions.

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