PLANO, TX—Hotel volume is down but pricing is up. So said a group of hotel financing experts at the Lodging Conference last week. Moderator Teague Hunter, president of Hunter Hotel Advisors led the discussion regarding $20 million-plus transactions among panelists, Peter Berk, president, PMZ Realty Capital LLC; Ben Brunt, principal and executive vice president, acquisitions and development, Noble Investment Group; Ian McAuley, president, American Hotel Income Properties REIT LP; and Rushi Shah, CEO and principal, Aries/Conlon Capital.
Brunt indicated that volume has been leaner this year, at about 75% versus 2016. Teague indicated that buyers aren't seeing RevPar growth at this time and expense creep is a factor because of higher construction costs due to increased labor costs. However, Teague said he would argue that the industry is somewhat in check in terms of healthy balance sheets and overall supply.
One example of higher construction costs was the illustration of an independent hotel in Las Colinas that came with a $30 million construction price tag and a 55% loan to cost nonrecourse ratio. Another recent example of acquisition financing and $20 million-plus sale was for the Dallas/Plano Marriott at Legacy Town Center, a 404-room full-service hotel.
The Holliday Fenoglio Fowler LP team marketed the property on behalf of the seller, Ashford Hospitality Prime. Roch Capital purchased the property encumbered of the existing management contract. Additionally, working on behalf of the new owner, the HFF team placed the 10-year fixed-rate loan with Morgan Stanley Bank.
Completed in 2001, the six-story hotel includes 49 suites. It features 36,223 square feet of function space, an oversized fitness center, outdoor heated pool with whirlpool, concierge lounge, business center and two dining options. The Marriott is situated on 4.18 acres at 7121 Bishop Rd. within the 168-acre Legacy Town Center, which welcomes 5 million visitors annually and is the urban town center of the 2,800-acre Legacy Business Park. Additionally, the property overlooks Bishop Park and is just off the Dallas North Tollway.
The HFF investment advisory team representing the seller included senior managing director and head of HFF's hotel group Daniel Peek, managing director John Bourret and director Austin Brooks. The HFF debt placement team representing the borrower consisted of senior managing director Michael Weinberg and senior director Pete Fehlman.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
