In July, Hilton named the Hilton Portland & Executive Tower as one of eight hotels that it planned to sell as part of a larger disposition strategy it initiated in May. Between May and July, Hilton sold 13 hotels in 11 transactions totaling $416 million. The corporation says the sales are a way of striking a greater balance between income derived from real estate and income from management and franchise fees.
The Portland Hilton was expanded in 2002 with a new tower caddy corner from the main hotel. Located on Southwest Taylor Street between Fifth and Sixth avenues, the tower contains nine levels of parking below nine levels of hotel rooms.
The $65-million project was developed by Portland-based Melvin Mark Cos. for itself and Hilton Hotels. Melvin Mark retained ownership of the parking garage and the ground-floor retail space in a condominium agreement with Hilton.Craig Lewis, an executive with Melvin Mark's Development arm, says Melvin Mark continues to own the garage and retail. The street-level retail is fully leased he says, but a 10,000-sf space in the basement remains to be leased. The current asking rate is $15 per sf per year, triple net.
Since its new tower was completed in 2002, local Hilton officials have been critical of recent public-private partnership plans to develop new hotel rooms in the central city. Those plans include converting the upper floors of the Downtown Meier & Frank building into a boutique hotel and developing a 600-room hotel adjacent to the Oregon Convention Center. Currently, as the largest hotel in the city, the Hilton wins a goodly share of the room nights generated by conventions at the OCC.
Local hotel broker Ed Dundon of Dundon & Co., who was not involved in the transaction, tells GlobeSt.com that Hilton's requirement that it retain a long-term management for the property likely lowered the price some, he says. Still, he says $107,000 per key "is a very reasonable price in today's market. Hotel companies are trying to raise capital and assets like that are trading at a very high price."
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