Wave of hotel offerings washes over market

Real Estate Alert, Feb 11, 2004

Sixteen hotels valued at about than $1.3 billion are suddenly up for grabs.

Blackacre Capital Management is offering two portfolios. One, valued at $550 million, contains six hotels, including the Ritz-Carlton Kapalua on the Hawaiian island of Maui. The other consists of three Manhattan properties worth about $100 million.

Yarmouth Capital Partners, an opportunity fund, is marketing three properties with a combined value of $180 million. Among them is the five-star Ritz-Carlton Half Moon Bay outside San Francisco.

Three major hotels are being offered by different owners: the 380-room Four Seasons at Wailea on Maui, which is expected to fetch about $240 million; the Radisson Plaza-Warwick Hotel Philadelphia, which is worth about $60 million; and Crowne Plaza U.N., on Manhattan's East Side, which is likely to sell for around $50 million.

In addition, Maritz, Wolff & Co. has listed the 382-room Four Seasons Toronto with Sonnenblick-Goldman. The property could fetch bids as high as $120 million, or $314,000/room. The buzz is that Los Angeles-based Maritz is also mulling whether to offer an 18-property portfolio valued at about $500 million.

The spate of offerings could presage a deluge of hotel sales this year. Buyers, including many opportunity funds, have been anxious to take advantage of the downturn in the hotel market since the 2001 terror attacks threw property performance into a tailspin. But low interest rates enabled sellers to hold on much longer than expected, creating a fairly wide gap between buyer and seller expectations.

Now, with a spurt of sales late last year having established a pricing standard, that gap has narrowed. "We're finally seeing deals chasing money, instead of the other way around," noted one market player.

Blackacre, a highly secretive opportunity-fund operator, has listed its two portfolios with different brokers. Blackacre owns the larger portfolio through a joint venture with Marriott International called Capital Hotel Management of Beverly, Mass. Besides the 548-room Ritz-Carlton Kapalua, which itself is worth well over $200 million, the portfolio includes Marriotts in Los Angeles, Atlanta and St. Thomas, Virgin Islands. There are also hotels in Fort Worth, Texas, and Miami Beach, Fla. Eastdil Realty's New York office has the listing.

Blackacre is also offering three mid-sized properties in Manhattan that it owns in partnership with Hampshire Hotels & Resorts of New York: The 192-room Time Hotel near Times Square, the 349-room Quality Hotel on 94th Street on the Upper West Side and an 87-room Comfort Inn at 71st Street and Central Park West. Sonnenblick-Goldman is the broker.

Yarmouth, a $650 million opportunity fund that Lend Lease Real Estate Investments of Atlanta is liquidating, has listed three properties with two brokers. Hodges Ward Elliott is brokering the 261-room Ritz-Carlton Half Moon Bay, which is worth some $100 million, and the 191-room Kapalua Bay Hotel on Maul, valued at around $50 million. Jones Lang LaSalle's Los Angeles office has the listing on the 239-room Lakeway Inn Resort & Conference Center in Austin, Texas. The property could fetch more than $30 million.

Japan-based Shimizu Land is offering the 380-room Four Seasons at Wailea on Maul via Secured Capital. The expected sales price of $240 million would translate into $632,000/room. Shimizu came close to selling the posh property to billionaire Marvin Davis three years ago for about $209 million, but the deal fell apart when Davis tried to negotiate a lower price.

The 545-room Radisson Plaza-Warwick Hotel Philadelphia is being marketed by a joint venture between Apollo Real Estate of New York and Carlson Hotels Worldwide of Minneapolis. The property, which underwent massive upgrades over the past few years, is the fourth-largest hotel in Philadelphia.

Intercontinental Hotels & Resorts of Atlanta is offering the 314-room Crowne Plaza U.N., which is located one block from the United Nations.

Sonnenblick-Goldman has the listings on the Radisson and the Crowne Plaza.