That interest, according to Urban, was evident during the marketing process, but not all of the interested investors could put money where their mouths were. "We have competition in all sectors, but fewer in deep turnarounds like the Sheraton represented," he says.

Urban points out that the asset- which is situated at 4801 LBJ Freeway and Dallas North Tollway-is one of the most prominent locations in Dallas. It is across from the Dallas Galleria, which includes a wide variety of shipping, dining and entertainment options and is only 20 minutes from the Dallas/Fort Worth airport. The area is also home to many recognizable blue chip corporations, such as Nordstrom's corporate headquarters and offices of FedEx/ Kinko's, Highland Capital Management, ABC Broadcasting/Disney and Coca-Cola.

"The Dallas submarkets, like most suburban areas in the US, suffered more than CBDs during the recession because they didn't benefit from the normal compression patterns," Urban says. "HEI looks for hotels where we can capitalize on our management and repositioning strength while tackling complicated transactions in markets we project to be the strongest over our hold period."

Urban points out that HEI is putting in $15 million over the hold period, "to fix the old building issues and to bring the property to top standards." Those standards, he says, include some of Sheraton's updated features in its branding such as the expanded Link@ Sheraton program-a communications hub in hotel lobbies that doubles as an Internet lounge and a social networking hub-and revamped Fitness Centers. Urban also points out the building needed a new exterior, and overhauls of HVAC systems and exterior grounds, to name some of the major points. The largest obstacle in the deal, Urban tells DAI, "was making sure we had a good idea of the physical issues, especially behind the walls.

"HEI's acquisition of the Sheraton North Dallas underscores our ability to seek value-added hotel opportunities that will benefit from our core strengths in management and renovation," he continues. "We have confidence in the market recovery and our ability to drive profitability through a comprehensive renovation."

In terms of finding those value-add hotel opportunities, Urban says that there are many available, but rarely in what he believes to be strong or potentially strong markets. In terms of buying distressed hotels, he says, "it is the way to go if you choose the right market and the right brand and are realistic about the capital needs."

According to Steve Mendell, HEI's president of acquisitions and development, once renovations are completed, the hotel "will align perfectly with our portfolio of upper-upscale properties in leading US markets." He, like Urban, says that HEI "continues to seek out assets that leverage the experience of our multi-disciplinary owner/operator platform."

Other players involved in the deal were Goodwin Proctor and a litany of renovation experts.

As GlobeSt.com reported in February of 2008, the hotel was previously branded as an Adam's Mark and repositioned as part of a rebranding campaign that was launched by the new ownership at the time. The Chartres Lodging Group, formerly known as the Oxford Lodging Advisory and Investment Group LLC, and Goldman Sachs' Whitehall Street Global Real Estate Fund, acquired the hotel as one of five Adam's Mark Hotel properties from HBE Corp.

This is the firm's second hotel purchase in Dallas in the past year. In June, 2010, the firm acquired the 258-room Le Meridien Dallas North for an undisclosed amount.

According to a recent report written by Daniel Lesser, president and CEO of LW Hospitality Advisors, and published by GlobeSt.com, US lodging fundamentals are anticipated to continue rebounding during the next several years. This will result in a prolonged rise in sales volume of an array of hotel assets. Pricing of major US lodging properties is gaining momentum as investors that were able to hold on during the downturn now bring assets to market. Furthermore, the report says that savvy sponsors who acquired properties at or close to the recent market bottom are now executing exit strategies to monetize robust returns that have been realized during a relatively short hold period. Add to that the latest survey and forecast by San Francisco-based PKF Consulting, and you come up with a scenario that seems designed for firms like HEI. "The early stages of this lodging recovery were dominated by the upper-tier properties," PKF said in that report. With RevPAR expected to continue rising in 2011 and beyond, "the recovery is projected to spread across the entire spectrum of the lodging industry."

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