Transaction is Example of Nationwide Trend of Sale-Leaseback Deals

Phoenix, Arizona –  Byrd Hotel Group has finalized a $20 million sale-leaseback transaction involving four hotel properties in Goodyear.  The deal with KawaCapital Management of Florida is an example of the growing sale-leaseback trend in the industry, allowing owners to monetize properties while continuing to operate hotel assets.

“While sale-leasebacks in the hospitality space have become more common across the U.S., this is the first transaction we have seen in a while here in Arizona,” says Jon Grantham with Colliers International in Greater Phoenix.   “The seller was able to maximize payout, as well as execute a defeasance of his cross collateralized CMBS.  This allowed the seller to prune his portfolio and dispose of a now free and clear asset to utilize otherwise stagnant capital.”

Byrd Hotel Group of Goodyear sold the four properties to Kawa Capital Management.  Grantham and James Meng of Colliers International in Greater Phoenix represented the seller in the transaction.  Kawa was self-represented.

The properties included in the transaction include:

• Red Lion Inn & Suites at 1313 N. Litchfield Rd. – 90 rooms
• Hampton Inn & Suites at 2000 N. Litchfield Rd. – 110 rooms
• Holiday Inn & Suites at 1188 N. Dysart Rd. – 100 rooms
• Residence Inn at 2020 N. Litchfield Rd. – 78 rooms

The four limited and full-service hotels contain a total of 441,967-square-feet of space on approximately 10.14 acres of property.  All were part of the Byrd Hotel Group, formerly doing business as Byrd Enterprises of AZ, Inc.  The company selected the Phoenix/Goodyear market because of its strategic growth opportunity to build near the fast-growing Phoenix metro area.  Since 1996, Byrd has developed, owned and operated nine hotels.

“We have long-standing relationship with this seller and I have personally watched their family’s portfolio successfully grow,” says Meng.  “Kawa Capital was a great fit for the Byrd family and with the sale-leaseback, the seller’s portfolio will continue its healthy expansion.  There are many great things ahead for our client.”

Local Investor Purchases Property with Plans to Improve Operations in Dynamic Market

Phoenix, Arizona – A private investor in Scottsdale has purchased the Comfort Suites Old Town Scottsdale at 3275 N. Drinkwater Blvd. for $7.25 million ($120,833 per key).

The investor, who specializes in hospitality properties, plans to update the operations of the hotel and take advantage of quality market conditions in the Old Town Scottsdale hotel industry.

The Comfort Suites Old Town Scottsdale is situated on 1.32 acres of land an includes 32,436-square-feet of space.  The 60-room suites hotel was constructed in 1995.

The Scottsdale investor purchased the property from Colony North Star REIT, with offices in Los Angeles and New York.  James Meng and Jon Grantham of Colliers International in Greater Phoenix negotiated the purchase on behalf of the buyer. Colony North Star represented itself in the transaction.

“This is a great example of the Colliers International Hotel team working with institutional ownership to provide an otherwise unobtainable opportunity to the private capital pool,” says Meng.

According to Meng, Phoenix is experiencing pressure from both fronts for pricing of assets.   We have an expanding 10-year bond rate on one side and cap rates compressing from out of state buyers seeking higher spreads than what they would receive in west coast gateway cities.

“Utilizing our institutional connections and experience in operations, we were able to connect the bridge by providing Colony North Star a great price and the private investor the opportunity to capitalize on a newly renovated hotel in one of Phoenix’ hottest submarkets,” says Grantham.

Colony North Star currently has assets under management of $43 billion and manages capital on behalf of stockholders, as well as institutional and retail investors in private funds, non-traded and traded real estate investment trusts and registered investment companies.  In addition, the company owns North Star Securities, LLC, a captive broker-dealer platform which raises capital in the retail market.  The firm maintains principal offices in Los Angeles and New York, with more than 500 employees in offices located across 18 cities in 10 countries.

Off-Market Transaction Posts First Time the Property Has Been Sold

Phoenix, Arizona – The Staybridge Suites Tucson Airport has been sold for $8.5 million ($87,629 per room) to a local investor.  The extended stay hotel has never been sold before and the transaction was an off-market deal.

James Meng and Jon Grantham of Colliers International in Greater Phoenix negotiated the transaction.  The Koehler Organization of Aberdeen, SD sold the property to Doro Arizona, LLC, an Arizona-based investor (Dorota Krzyzostanian, manager).

Staybridge Suites is located at 2705 E. Executive Dr., just 10 minutes from Davis-Monthan Air Force Base and the University of Arizona. The three-story hotel contains 97 suites was constructed in 2009. The hospitality property features on-site guest laundry facilities, on-site fitness center, and a pool with fire feature.

“The Tucson South/Airport market has seen a 6.7 percent increase in demand year-over-year,” says Meng.  “No new supply has been added, so this buyer was attracted to the property in a tightening market to satisfy their 1031 needs. This is the third hotel we have sold on behalf of The Koehler Organization.”

The buyer will be taking over management of the property and plans to fully renovate the hotel in the next year.

To learn more see RED Comp #5789.