The Zona Hotel and Suites in Scottsdale was sold yesterday for $52m or $120,650 per key in an all cash deal that included $7.28m in furniture, fixtures and equipment. The buyer was Kissimmee, Florida-based hotel operator Orange Lake Resorts, which is strategically allied with International Hotel Group—parent company for Holiday Inn. The seller was Vancouver, BC-based hotel investor, Sunstone Realty Advisors, who acquired the property three and a half years ago for $32m from lenders.
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| The Zona Hotel and Suites |
The 431-key resort sits on 11.91 acres west of the southwest
corner of Princess Boulevard and Hayden Road in Scottsdale. The property totals
142,174 ft2 in seventeen 3-story buildings and features four resort-style
pools. The resort was built in 1987 and underwent major renovations in 2007 and
2011. Rooms range in size from 275 ft2 guest rooms to 1,200 ft2
four bedroom suites with an average two-bedroom room size of 600 ft2.
The Zona Hotel was acquired from its original developer by a
joint venture between Whitehall Street Global—an affiliate of Goldman Sachs—and
Trinity Hotel Investors for $77m in late 2005. At that time there were 483
rooms and the property was slated for renovation. To that end, Whitehall and
Trinity secured $45m in new debt with Lehman Brothers in early 2006 and an
additional $95m with Capmark Bank in mid-2007. By June of 2009, the property had
been noticed for trustee sale on the Capmark note and the property reverted to
Capmark deed-in-lieu in October of that year.
As mentioned above, Sunstone acquired the property for $34m
with $13.6m down and $22.4m new debt with Capmark, comprised of a $20.4m “A”
note and a $2m “B” note with sale. The $52m sales price represents an unlevered
return of 52.9% or 15.5% annualized, a levered return of 282% or 80.6%
annualized and a cash-on-cash return or 117.6% or 33.6% annualized—ignoring operational
proceeds and costs.
To Contact the Author:
Paul Dionne – pdionne@vizzda.com
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