|By Linda Tucci, St. Louis Post-Dispatch |
Knight Ridder/Tribune Business News
Aug. 15, 2003 - The Adam's Mark hotel chain has put 10 of its remaining 22 hotels up for sale and may be quietly shopping others, including its flagship in downtown St. Louis.
The hotels are being offered by Hodges Ward Elliott, a hotel brokerage firm in Atlanta. They include two hotels in Indianapolis, two in Colorado and properties in Philadelphia and Orlando, Fla.
The Adam's Mark chain sold hotels in Memphis, Tenn., and Houston in the spring; its Denver hotel has been on the market since last fall.
Prices range from $55 million for a hotel and garage in downtown Indianapolis to $14 million for a 273-room property in Grand Junction, Colo., according to recent marketing materials. The total package adds up to $355 million, a sum that also includes a $24 million office building in Charlotte, N.C.
The chain is owned by Creve Coeur-based HBE Corp., a national firm that also builds and designs hospitals. Whether the offering means HBE is looking to get out of the hotel business is unclear.
HBE founder and Chief Executive Fred S. Kummer was traveling and could not be reached for comment Thursday. A spokesman said the company typically does not comment on whether hotels are being marketed.
When the Houston and Denver hotels came on the market last fall, however, Kummer told the Post-Dispatch that he was not averse to paring down. "As tough as this market is, we are going to sell a hotel or two."
Hotel consultant Gary Andreas said this latest marketing effort comes as no surprise. "The chain has been struggling for the last couple of years, due both to the economy and some of the litigation problems," he said, referring to the chain's two-year court battle with the National Association for the Advancement of Colored People over allegations of racial discrimination. The chain said it did nothing wrong but agreed to pay $1.1 million to settle the case.
Kummer came close to selling six Adam's Mark hotels to a Kentucky hotel operator after the Sept. 11, 2001, terrorist attacks but changed his mind in early 2002, after the buyer asked for more time to finance the deal.
How fast these hotels will be snapped up depends on the pricing, said Tom Ellsworth, director of real estate for PKF Investments in Boston, a hotel-brokerage firm. Hotels have not been hot sellers in recent years, in large part because asking prices still reflected the inflated values of 2001, he said. "The spread between buy and sell was too much."
But the market is showing signs of picking up, Ellsworth said, as sellers' expectations have become more realistic and foreclosures have forced sales.
Andreas agreed that the appetite for hotel properties is there, but said financing remains a problem, and competition for investment dollars is stiff, most recently among higher-end chains like Adam's Mark.
"There are more hotels in the upper 25 percent of the spectrum for sale than we've seen in the last five or six years," he said, "which will tend to put some upper limits on the sale price that can be achieved."
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(c) 2003, St. Louis Post-Dispatch. Distributed by Knight Ridder/Tribune Business News.