"We are taking an unbranded product and applying Hyatt standards to a hotel that's already performing to take it from one level to the next," explains Benjamin Brunt, principal and executive vice president of the Atlanta-based Noble Investment Group. The new owner will invest $6.4 million into upgrades to put the Hyatt Regency flag onto the 17-story hotel at 701 E. Campbell Rd.
Brunt says the search for an architect has begun. The designing process should get under way early in the first quarter, with the makeover expected to take one year to complete.
Brunt tells GlobeSt.com that the Hyatt Regency conversion is underwriting the value-add play in terms of rates and occupancy. He says the Hyatt flag is projected to generate an average daily room rate in the mid $130 range. Currently, rooms are hovering $99 per day. Occupancy is registering at the low 60% level.
[IMGCAP(2)]"With the addition of the Hyatt brand, Noble management, upgrades and the market strength, the belief is it will get to a high 60%," Brunt says. In addition to the rooms, upgrades will be made to the 13,000 sf of meeting space, restaurant and public areas like the 7,800-sf ballroom.
Brunt isn't discussing the buy-in cost, but did say that Noble got the deed for considerably less than its replacement tab. "We feel like we were able to buy something at the right price, put in $6.4 million and still be at 60% of the replacement cost," he confides. "It was a fee simple transaction and unencumbered by management and brand." Dallas Central Appraisal District assesses the hotel and seven-acre site at $13.1 million.
Los Angeles-based Lowe Enterprises Inc. acquired the hotel in April 2004, stripping off the Omni flag and investing $8 million into upgrades. Built in 1984, the hotel delivered as a Ramada Renaissance.
Brunt acknowledges there is room to expand on the seven-acre tract. "It's possible that we will, but it's not in our immediate business plan," he says, adding there's time to decide because it's planned as a five- to six-year hold.
The buyer tapped its $310-million Noble Hospitality Fund LLC, which is just 20% spent, to acquire the hotel, which was marketed by William P. Stadler with Washington, DC-based Molinaro Koger Inc. Details about Noble's competition weren't available by press time, but Brunt says the fund "allows us to be nimble in these processes and gives us a competitive edge." The Richardson Hotel is the 10th deed to roll into the fund's portfolio.
Brunt says the hotel's proximity to Noble's other local asset, Dallas/Park Central AmeriSuites at 12411 N. Central Expwy., also factored into the buyer's decision. "They are different tier products in relative proximity," he says. "We see some synergy because they drive a different demand."
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