|By George Avalos, Contra Costa Times,
Walnut Creek, Calif.McClatchy-Tribune Regional News
April 12, 2011--WALNUT CREEK -- The Marriott Walnut Creek hotel is on the sales block, brokers said Monday, in a deal that could fetch $50 million or more for the downtown landmark.
Perched on North Main Street near Interstate 680, the iconic hotel is being offered for sale by a partnership headed by Patrick Nesbitt and his firm, Windsor Capital Group.
The 338-room hotel is expected to fetch a decent price in a market where hotels in good locations appear to be selling briskly.
"It's not a fire sale," said Norval Nelson, general manager of the Marriott Walnut Creek. "It all depends on whether they can realize a certain sales value, and if Mr. Nesbitt is willing to sell at that price."
A reasonable price for the hotel could be in the range of $150,000 a room, said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California hotel market.
"In terms of prices for comparable properties, you could be looking at prices in the $50 million-plus range," he said.
A big hotel near Los Angeles, the 451-room Sheraton in Universal City, is a "similar property" that recently sold for $200,000 a room, or $90 million, Reay said.
"A lot of REITS (real estate investment trusts) are in the market now looking for properties similar to the Marriott Walnut Creek," he said. "It's a good time to be putting higher-end hotels like this one on the market, that's for sure."
Other analysts agreed that sales activity for hotels
has improved in 2011. The current activity is well above the all-time lows to which the hotel sector plunged in 2009, said Miky Kuo, an associate in the San Francisco office of PKF Consulting USA, which tracks the nationwide hotel sector.
"The dollar value of hotel transactions was roughly four times higher in 2010 than in 2009," Kuo said. "It is estimated that there will be a threefold increase in the value of hotels sold in the United States in 2011 than in 2010."
Values for hotel sales are rising because the factors that drive those values -- room prices and occupancy rates -- have rebounded now that the economy has halted its meltdown, for now.
That upswing also has materialized at the Walnut Creek hotel.
"We have a pretty good story in our particular property, and the Bay Area in general," Nelson, the hotel manager, said. "Occupancies are building. We're seeing slow and steady improvement in demand and business increasing throughout the year."
The Marriott Walnut Creek is being marketed by a team of hotel brokers from Jones Lang LaSalle, a commercial realty firm.
The hotel recently completed a wide-ranging renovation that totaled $8.1 million, said John Strauss, managing director for Jones Lang LaSalle Hotels.
"All of its guest rooms and a considerable amount of the public spaces have been updated, which a new owner will be able to leverage to drive revenues as the market recovers," Strauss said.
The hotel might benefit from future upgrades to its conference rooms, said Mark Fraioli, vice president of Jones Lang LaSalle Hotels.
"A new owner could complete a comprehensive meeting space renovation to make this the premier group hotel in Walnut Creek and push occupancy and average daily rates beyond historic levels," he said.
The hotel is being offered for sale in the wake of a March refinancing effort by Nesbitt and Windsor Capital.
Nesbitt rescued 18 of his hotels from foreclosure by landing $165 million in new mortgages from Starwood Property Trust to pay off a delinquent loan held by investor Jonathan Eilian.
The refinancing and $22 million that Nesbitt gained from the sale of a Walnut Creek apartment complex was used to pay off the Eilian loan and a $108 million mortgage on several of his hotels.
The Marriott Walnut Creek became "a property targeted for sale" in the wake of the refinancing effort, according to Jones Lang LaSalle Hotels.
Plenty of buyers are likely to emerge for the East Bay hotel, Reay said.
"This kind of asset is much stronger than it was only 12 months ago," he said. "They will get a tremendous amount of interest in that hotel."
Contact George Avalos at 925-977-8477.
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Copyright (c) 2011, Contra Costa Times, Walnut Creek, Calif.
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