Off-Market Deal Ropes 294-Room Radisson

RICHARDSON, TX-In an off-market deal, a local hotel investor has acquired the 294-key Radisson Hotel from Carlson Hotels Real Estate Inc. Underwriting the acquisition is the hotel’s standing as the best performing property in its zip code and a $2.5-million renovation to pump up future returns.

Brokers aren’t discussing what the Plymouth, MN-based Carlson realized from the quiet trade of the 6.1-acre asset at 1981 N. Central Expwy. Austin-based Source Strategies Inc.’s vice president Doug Sutton says to build a comparable full-service hotel that it would cost $110,000 to $120,000 per key, excluding land costs. Dallas Central Appraisal District has the hotel assessed at $15.6 million or $53,388 per room. Given the deal’s dynamics, it’s a safe bet that HM-NM Inc., led by Al Mori of Dallas, paid at least $60,000 per room for the deed.

CB Richard Ellis first vice president Bert Stevens and vice president Bidjaan Kassam brokered the sale. Stevens tells GlobeSt.com that Carlson hadn’t tagged the asset as non-core, but two other Radisson-flagged hotel sales in the market showed enough demand that the seven-year owner was convinced to sell. But, he adds marketing was done “on a very confidential basis.”

In 2006, Mori, the investment group’s vice president, bought a 220-room Holiday Inn Select at 1655 N. Central Expressway, about one mile from the Radisson. “He was an ideal candidate,” Kassam explains. As part of the new pickup, Mori signed a new long-term franchise agreement to keep the Radisson flag in place.

Built in 1982, the hotel opened as a Hilton, swung to a Clarion and then became a Radisson under Carlson’s reign. According to Sutton, the hotel has is leading competitors in its zip code, one of three in Richardson that Source Strategies uses to monitor the market. He calculates the Radisson’s RevPAR at $59.90 versus the $49 average of its immediate competitors.

“The Radisson is the best performing hotel in its zip code,” Sutton explains, “but that’s not in all of Richardson.” In a neighboring zip code, the leaders are ringing up $58.24 and $63.77 in RevPAR so it’s a good sign that there’s upside to be gained for Mori’s plan to renovate his newest prize.

The Radisson’s immediate competitors also are of the same vintage so the upcoming renovation of all guest rooms, lobby and common areas like the 12,000 sf of meeting space most likely will give the new owner some added leverage in the submarket. At the end of third quarter 2007, the Radisson’s average daily room rate is $90.38 and its trailing 12-month occupancy was 66.3%, according to Source Strategies.