Lubert-Adler Buys Cottonwoods, Plans Redevelopment

By: Paul Dionne | Vizzda 

The Scottsdale Cottonwoods Resort and Suites has a new owner this week and plans have been approved by the Town of Paradise Valley to overhaul the thirty-four year old resort near Scottsdale Road and Lincoln Drive. Philadelphia-based value-added real estate investment firm Lubert-Adler Real Estate Funds paid $10,869,624 for the 171-room resort and an additional $2,130,376 for a vacant five acre parcel adjacent to the southwest for total cash consideration of $13m. The seller was Chicago-based private equity real estate investment firm, Walton Street Capital, who had limited their recent activity in the Phoenix market to the acquisition of industrial flex properties in the Southeast Valley. 

The resort’s 171 rooms and attendant facilities comprise forty one one-story buildings totaling 133,510 ft², 81,440 ft² of which is attributable to guest room space. The resort was built in 1980 on 23.72 acres and features sixty-four 355 ft² casitas, seventy-two 485 ft² suites and thirty-four 700 ft² deluxe suites as well as three pools and four tennis courts. Plans approved in April of 2014 call for the refurbishment of forty-five of the existing rooms, updated lobby and pool areas, the addition of two 36’ tall hotel buildings with 45 rooms each, thirty-two 28’ tall residences and fifteen single-story residences for a total of 135 hotel units and forty-seven residences. The redeveloped resort and residential subdivision will have a density of 6.61 density units per acre based on the 27.5 acre project area stipulated to by the Town of Paradise Valley. 

Walton Street Capital previously acquired the property from CTF Hotels and Resorts in June of 2005 for $15m apportioned as $12m for the hotel—including $1.925m in furniture, fixtures and equipment—and $3m for the vacant parcel to the southwest. Walton Street Capital secured Cottonwoods under an existing, cross-collateralized $147m mortgage note and a new, asset-specific $23m mezzanine note with Column financial at the time of sale. Additionally, Walton Street Capital signed a management contract with Renaissance Hotels for the operation of the resort for three 6-year periods with one automatic 6-year renewal at the time of sale. In 2007, the mortgage note was assigned to Wells Fargo and securitized for the benefit of the registered shareholders of Credit Suisse First Boston Commercial Mortgage Pass-through, Series 2005-TFL2.

To Contact the Author:

Paul Dionne – pdionne@vizzda.com