SCOTTSDALE, AZ-In an off-market transaction, the Chicago-based Strategic Hotels & Resorts Inc. has signed a purchase agreement for the 651-room Fairmont Scottsdale Princess for $345 million and an abutting 10 acres for $15 million. If all goes as planned,a Fairmont Raffles Holdings International affiliate will do the hand-off in mid- to late Q3.

The hotel was developed in 1987 on 65 acres at 7575 E. Princess Dr. The asset caught Strategic Hotels’ eye for several reasons, one of which was occupancy averages about 79% in a market that typically boasts a 75% rate. “We think this hotel defines the market in a lot of ways and is the best meeting hotel in the marketplace,” explains James Mead, Strategic Hotels’ CFO and executive vice president. “We think the asset is very beautiful and custom-made for the Arizona desert.”

Strategic Hotels, which already owns the Hyatt Regency at Civic Plaza in Downtown Phoenix, already is thinking of uses for the 15 acres. “The plans for the additional land are to add meeting space to increase what’s already in the hotel,” Mead says, adding another possibility is more rooms, pending city approval.

Although the hotel is nearly 20 years old, Mead tells that little will be done to upgrade it. “It’s in very good condition,” he explains. “We might make some changes to the retail, but other than that, the hotel will stay as is.” The management team also will remain in place, with Fairmont continuing to oversee day-to-day operations.

Strategic Hotels remains interested in the market, but Mead says there’s nothing else under contract. But, he hints, more transactions could close within the next 18 months.

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