Every little thing is greater in Texas, together with resort trades.
Earlier than the ink has barely dried on the biggest single-asset resort transaction ever in Texas comes one other providing involving one of many largest inns within the Lone Star State, with one other large price ticket.
A partnership between San Diego-based Manchester Monetary Group and Los Angeles-based Colony Capital has delivered to market the leasehold curiosity within the Fairmont Austin, a 1,048-room resort in Downtown Austin at 101 Purple River Road. Eastdil Secured is advertising and marketing the property, with bids anticipated to return in at about $575K/room, Inexperienced Road reported.
That interprets to about $600M, a brand new document for Austin, however not fairly as giant as final month’s statewide record-breaker: Ryman Hospitality’s $800M buy from Blackstone of the 1,000-room JW Marriott San Antonio Hill County Resort & Spa.
Blackstone’s deal, which closed on June 5, is the most-lucrative single-asset resort transaction ever recorded in Texas and the second largest nationally this 12 months, in keeping with Inexperienced Road’s Gross sales Comps Database.
If Fairmont Austin fetches $600M, it could exceed Austin’s earlier document for a single-asset resort commerce, the $246M buy in 2021 by Host Inns & Resorts of the Resort Van Zandt.
What Inexperienced Road calls “investor exuberance” for inns in Texas additionally has pushed the bidding for a portfolio of boutique property in Austin, Dallas and Houston to shut to $300M.
Three inns underneath Charles Givens’ Resort ZaZa model have gone on the block, encompassing 641 rooms plus the administration rights for one more with 159 rooms. The three inns hit the market with an estimated worth of $270M, or $421,000/room, with the steadiness allotted to the administration contract. Eastdil Secured has the itemizing, which is being shopped as a portfolio.
The providing consists of all the Resort ZaZa line, together with fee-simple pursuits within the 159-room Resort ZaZa Austin Downtown, the 167-room Resort ZaZa Dallas Uptown and the 315-room Resort ZaZa Houston Museum District. The management-contract portion of the itemizing is for the Resort ZaZa Houston Memorial Metropolis, which is individually owned and wouldn’t be a part of a sale. The contract expires in December 2027 and consists of renewal choices.
The portfolio additionally consists of branding and administration rights for the Resort ZaZa line, an unbiased model competing within the luxurious phase. Resort ZaZa gives themed rooms to company, together with what are often called Magnificent Seven Suites, named for a preferred film.
In keeping with the report, the three ZaZa properties have drawn vital investor curiosity resulting from their sturdy efficiency and areas in prime submarkets. Final 12 months, the three owned inns averaged $183 of income per accessible room, in enhance from the pre-pandemic RevPAR of $173.
There have been greater than $4B in gross sales of enormous Texas inns up to now two years as traders have been drawn to sturdy long-term efficiency fundamentals. In keeping with Inexperienced Road’s Gross sales Comps Database, there have been $2.5B in resort transactions in 2021 in Texas, a state document; final 12 months’s whole was $1.6B. This 12 months’s whole is on observe to high each of them.
As of April, RevPAR at comparable luxurious inns in Austin’s central enterprise district averaged $246.11/room, with 70.8% occupancy and common charges of $347.81, in keeping with STR. That degree is monitoring forward of the pre-pandemic degree in 2019, when revenues averaged $239.61/room and charges averaged $304.79.
The Fairmont Austin, certainly one of two inns in Austin to hold a luxurious worldwide model, is topic to a administration settlement with Fairmont Inns & Resorts that runs till 2038.
The 37-story glass tower, with a color-shifting 139-foot spire on its crown, is the third-tallest construction within the metropolis. The constructing connects by way of pedestrian bridge to the Austin Conference Heart, which hosts the SXSW convention. The Fairmont options 129K SF of assembly area and a rooftop pool.
In keeping with the advertising and marketing supplies, the resort’s common RevPAR ranks third amongst Texas conference middle inns, in keeping with advertising and marketing supplies.
Manchester and Colony developed the Fairmont Austin in 2018. In 2019, the enterprise refinanced its building mortgage with a $425M debt package deal together with a $300M senior mortgage and two mezzanine loans totaling $125M. The debt package deal comes due in September, however the companions have the choice of a one-year extension.
The Fairmont Austin generates greater than two-and-a-half occasions the earnings wanted to cowl its debt load, in keeping with a KBRA Analytics report.
