|By Jennifer Bjorhus, Star Tribune,
MinneapolisMcClatchy-Tribune Regional News
Apr. 10, 2010 -- A private equity firm has snapped up the Radisson Hotel and Water Park of America in Bloomington for an undisclosed sum.
Wheelock Street Capital, a real estate private equity firm in Greenwich, Conn., said Friday that an affiliate bought the 403-room hotel and amusement park, but it didn't disclose the terms of the sale.
"We are delighted to be acquiring this high-quality asset next to the most visited mall in the country," the company said in its announcement Friday.
Jeffrey Wirth, head of the Wirth Cos. in Minneapolis, which developed the complex with its huge green tubes curling around the exterior, said he's governed by a confidentiality agreement and can't discuss the purchase.
Wheelock partner Patrick Campbell said in an interview that it would be business as usual at the venue and that he didn't expect any layoffs. Wheelock plans to make some minor improvements in the facility, he said.
Davidson Hotel Co., a hotel management company based in Memphis, will be managing the complex, which had been managed by Wirth.
A spokeswoman at the hotel Friday confirmed that the hotel would continue as a Radisson.
Campbell said the property was "priced well," but wouldn't discuss the cost or even confirm who sold it.
Campbell said his company is focused on hospitality properties at the moment "where we think the best and highest opportunities are."
The Water Park of America, one of the largest indoor water parks in the country, opened next to the Mall of America in 2006 during a water-park boom. According to news reports at the time, Wirth Cos. financed nearly 90 percent of the hotel-park project with a $94 million loan from iStar Financial Inc., a real estate investment trust in New York. The 403-room hotel was first called Grand Lodge and then rebranded a Radisson.
The recession and tight credit markets have hammered the hotel industry in general. Values nationally have dropped 30 to 60 percent since the peak in early 2008, said Rick George, a partner in the Chicago and Los Angeles offices of Hospitality Real Estate Counselors.
"It's been crushed," George said. "Probably 50 percent of the hotels out there will be in some sort of monetary default in the next 24 months. There's a huge number of loans that are coming due this year, next year and the year after."
It's not clear whether Wirth had to sell the Bloomington property. The company appears to be current on its property taxes. iStar Financial didn't return phone calls Friday. But the bargain-basement atmosphere doesn't bode well for Wirth on his selling price. George said it's fairly certain Wirth didn't get $94 million for the complex.
"If he gets half of that, he'll be doing great," George said.
Although it is in a different segment and lacks an amusement park, the Northland Inn, a 231-room hotel and conference center in Brooklyn Park, sold for about $21.1 million at a sheriff's foreclosure sale in December.
George said he's selling two distressed water park hotels at the moment, one outside Chicago and one in Ohio. It's a particularly tough niche given the overbuilding, and how expensive they are to build and maintain, he said. Insurance costs are huge, he said.
Wirth also developed and owns Grand Rios Indoor Water Park in Brooklyn Park. The two water park hotels are probably Wirth's most visible projects, but the company owns several other properties, including the luxury Grand Hotel at 615 2nd Av. S. in Minneapolis.
Wirth put the Grand Hotel on the market in December "to see what interest there might be," he said Friday. "Technically, it's still listed."
Bill Morrissey, president of St. Paul-based Morrissey Hospitality Cos. Inc., said now is as good a time to sell as any, given the outlook for the next two or three years.
"We're going to have a slow recovery," he said.
Jennifer Bjorhus --612-673-4683
To see more of the Star Tribune, or to subscribe to the newspaper, go to http://www.startribune.com/.
Copyright (c) 2010, Star Tribune, Minneapolis
Distributed by McClatchy-Tribune Information Services. For reprints, email firstname.lastname@example.org, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:SFI,