Bricktown Hampton sells for $32M
By Brianna Bailey
The Journal Record
Monday, June 7, 2010

The Hampton Inn and Suites in Bricktown sold for $32 million. (Maike Sabolich)
OKLAHOMA CITY – A Virginia real estate investment trust has scooped up the Hampton Inn and Suites in Bricktown for $32 million, a price one market observer called one of Oklahoma’s most lucrative hotel sales in the past several years.

“That’s an extremely aggressive price and as much as I’ve seen for a Hampton at any point during the boom. It’s just an extraordinary price for this marketplace,” said Peter Holmes, CEO of the Oklahoma-based firm Hotel Broker One, which was not involved with the sale.

“Today’s market is still viewed as pretty depressed and this would represent a pretty significant, interesting shift in saying there are still properties out there that are valued extremely high,” Holmes said.

Apple REIT, one of the largest owners of Hilton-branded hotels in the country, purchased the two-year-old Bricktown hotel at 300 E. Sheridan Ave. and adjacent parking garage last week from Raymond Management, a Wisconsin-based, multi-brand hotel company, and Oklahoma City real estate developer Marsh Pitman.

The nine-story, 200-room Hampton was built in 2008. The hotel has an indoor pool and water park and features a brick façade to comply with architectural guidelines set by the Bricktown Urban Design Committee.

“It’s encouraging to me that out-of-state buyers are looking for property in Oklahoma,” Pitman said. “They like our economy … It’s a very vibrant market and people outside the state recognize that.”

Raymond Management and Pitman Resources will continue to manage the hotel and parking garage, respectively.

A representative from Apple REIT on Monday declined to comment on the sale.

This is basically a rewritten press release with a feel good quote from the former owner. I kept looking for where it mentioned how much it was built for..

Found it in an old article, $20 million. So Pitman not only got $32 million in the end, but he made $12 million by DOING SOMETHING and not just sitting on his site and doing nothing. That's the real story, Journal Record.

So now that Pitman and the Wisconsin group have $32 million in cash I'm wondering what Pitman will do with his share.

Nick, what do you think most journalism is these days, re-written press releases my friend. I know, I write them for a living.

I wish that question would have been asked. Pitman, do you have any other plans for okc development?

So now that Pitman and the Wisconsin group have $32 million in cash I'm wondering what Pitman will do with his share.

If he doesn't spend it on more development then that will be one huge tax bill. Expect it to be re-invested.

Well, the hotel may have been built for 20 million, but how much did the "adjacent parking garage" get built for that was also in the purchase?

If he doesn't spend it on more development then that will be one huge tax bill. Expect it to be re-invested.

You still have to pay on capital gains even if you just transfer money to a different investment. The slate is wiped clean for this one particular venture, unless he has his finances set up as an investment fund where all of his money from his development stays.

This is a very good sign that the hotel environment in Oklahoma City is a very good investment for the future.

This is a very good sign that the hotel environment in Oklahoma City is a very good investment for the future.

Hopefully this can be used to lure more quality hotel development in the downtown core.

This is basically a rewritten press release with a feel good quote from the former owner. I kept looking for where it mentioned how much it was built for..

Found it in an old article, $20 million. So Pitman not only got $32 million in the end, but he made $12 million by DOING SOMETHING and not just sitting on his site and doing nothing. That's the real story, Journal Record.

So now that Pitman and the Wisconsin group have $32 million in cash I'm wondering what Pitman will do with his share.

Bolded for emphasis. Developers should pay heed--if you build it, they will buy you out.

If we wanted to force development, we'd be getting rid of any credits or tax exemptions on the ad valorem taxes for properties held for development by developers. I understand they can sit for a period of time without being assessed anything.

Interesting article on a new convention center attached hotel in todays DOK

Oklahoma City's plans for a conference hotel could require city subsidies | NewsOK.com (http://newsok.com/conference-hotel-plans-prompt-subsidy-warning/article/3467008?custom_click=lead_story_title)

Good article. City could help subsidize building it with a hotel developer and then sell it in 4 or 5 years and make a sizable profit!

Well the city needs to retain a minority interest at least in the hotel, same as the convention center (I presume they would outsource management once its built, same as with the Cox), in order to still have some say and be able to control booking.

Especially in the current economy, the only way a large convention center hotel would be built was with city backing. Dallas had to subsidize theirs and so did Denver. Denver is going to build a large hotel at DIAirport but only because they will be selling airport bonds to finance it. Agree with Spartan and the point made in the article that the city needs to have some ownership to block out convention times for convention goers.

I am involved in the convention center hotel in Dallas, and have been with a number of others the last few years. All are subsidized by the city. It is practically the only way these things are getting approved for financing.

Good article. City could help subsidize building it with a hotel developer and then sell it in 4 or 5 years and make a sizable profit!

Any word if the subsidy will cost more than $155 per room? That seem to be the going rate for outrage these days.

Any word if the subsidy will cost more than $155 per room? That seem to be the going rate for outrage these days.

LOL

Quick and dirty math alert...

$60M taxpayer subsidy on a 750 room hotel = $80,000 per room

Of course the cost per room comes down, lets say it has a 10 year lifespan before a remodel is needed = $8,000/room. Then divide that by occupancy rate per year....

Factor in that the above is for the cost of the entire hotel, not just the rooms.

Wonder if that room will generate $80,000 during its lifespan.. (yes)

Wonder if that room will generate $80,000 during its lifespan.. (yes)

Keep in mind that is just the potential taxpayers share of the room cost. The question is, will it produce $80,000/room in direct taxable revenue for the City. I don't have the quick-n-dirty math on that one.

:LolLolLol

LOL

Quick and dirty math alert...

$60M taxpayer subsidy on a 750 room hotel = $80,000 per room

Of course the cost per room comes down, lets say it has a 10 year lifespan before a remodel is needed = $8,000/room. Then divide that by occupancy rate per year....

Factor in that the above is for the cost of the entire hotel, not just the rooms.

How many bus routes will that fund?

Keep in mind that is just the potential taxpayers share of the room cost. The question is, will it produce $80,000/room in direct taxable revenue for the City. I don't have the quick-n-dirty math on that one.

:LolLolLol

I think the assumption of a $60 million subsidy to build a 750 room hotel is sort of assuming that the city is fronting the majority of the cost I think...or at least half. Keep in mind that a 750 room hotel is not an 850 ft skyscraper, more like 400 maybe, and the going rate is a lot different than a world headquarters..

Keep in mind that is just the potential taxpayers share of the room cost. The question is, will it produce $80,000/room in direct taxable revenue for the City. I don't have the quick-n-dirty math on that one.

:LolLolLol

I think the assumption of a $60 million subsidy to build a 750 room hotel is sort of assuming that the city has to front a rather huge portion of the cost. The total expense of building such a hotel is likely to not exceed $200 mil in my opinion.

The MOST important thing in the entire equation is that we continue to get more smaller hotels as infill projects, and that's where Marsh Pitman comes back in (back to the thread topic).

I still think we should get the Gaylords to build an elite resort hotel downtown!

The Gaylord family has no control over Gaylord Entertainment/Gaylord Resorts anymore. It's a publicly traded company based in Nashville.

Good news that the Hampton was valued that high by an out of state company.

I still think we should get the Gaylords to build an elite resort hotel downtown!

I have been hoping for that the minute I heard Okc wanting a new convention center with hotel.

The Gaylord family has no control over Gaylord Entertainment/Gaylord Resorts anymore. It's a publicly traded company based in Nashville.



The family is still a major shareholder and E.K.II is still on the Board, so while they don't completely control the company, they certainly still have some significant influence.

We need to get over the Gaylords. They were never going to do anything for OKC anyway.

Then what company or hotel brand do you want to build a convention hotel?

Whatever brand will do a nice hotel in OKC. W, Hyatt, Four Seasons, Intercontinental, Omni--really doesn't matter. A W would be pretty cool though, but I know realistically they aren't coming to OKC. Not even Core to Shore..lol

While we are dreaming on the hotel front, I would love to see some diversity from our current group of hotels.

Omni does a good job on the larger hotels so they might be a great one for the convention center hotel. Now I know I am dreaming but a well designed Mandarin Oriental would be awesome also.

I would also like to see some boutique hotels to add variety to OKC's hotel offerings, like a Kimpton.

I think local is the best way to go for boutique hotels. Hopefully someone will eventually turn the Bricktown Mercantile Building into a boutique hotel like the Colcord. Maybe the India Temple or KerMac buildings could serve as a good boutique hotel, too.

I think the best way to get Sandridge its vibrant plaza would be to convert one of those buildings into a boutique hotel. Maybe the Carnegie should be a boutique hotel instead of condos.

We definitely need a boutique hotel in Bricktown. I am surprised there isn't one yet. Not to mention two or three.

We definitely need a boutique hotel in Bricktown. I am surprised there isn't one yet. Not to mention two or three.

For one to build and open a boutique hotel, one has to first have evidence there would be enough people out there willing to pay boutique hotel room prices on a daily basis to make the boutique hotel profitable. Secondly, if there is such evidence, one will have a terribly hard time finding the financing to build it. Likely, the only way such a hotel would be built would be with private money.

While slowly improving, not everyone understands how the credit recession has completely fouled up the credit system. The Obama administration and Congress work diligently to put together new, strict controls on the entire financial services industry - which I am convinced are needed TO A POINT. But until the new controls are known, banks cannot go out on a limb and lend money in risky ventures. Obama has imposed significantly higher capital requirements on banks but that is the same money banks would, otherwise, be lending out.

At the same time, the far right demands there be no more bailouts - ever. This also has an effect on the lending practices of the large banks. They must be far more conservative and far more choosey as to who they lend to - so right now they don't lend to much of anyone.

Obviously, while much of it is their own fault, the large lending banks are in quite a Catch 22 right now.

I totally agree with you. I have family in the banking industry and they have done less loans because of the books of paperwork to do a loan.

Saying that the bank did make a loan to a hotel up on Memorial Road and if they can loan money to a hotel on Memorial Rd, they can do one for Bricktown. I know Memorial Road is a hot spot, but it is not a destination like Bricktown is. I am sure if the bank was presented with a great proposal they would loan the money to them. It is a local bank and only loans to local businesses.

I totally agree with you. I have family in the banking industry and they have done less loans because of the books of paperwork to do a loan.

Saying that the bank did make a loan to a hotel up on Memorial Road and if they can loan money to a hotel on Memorial Rd, they can do one for Bricktown. I know Memorial Road is a hot spot, but it is not a destination like Bricktown is. I am sure if the bank was presented with a great proposal they would loan the money to them. It is a local bank and only loans to local businesses.

Not saying it isn't possible to get financing but the banks will now require far more collateral than before. Often times, it is basically 100% collateral so the bank bears no real systematic risk. The Memorial Road hotel could have had this type of asset backing.

What bank is it?

I was under the impression that at least a portion of collateral for real estate development needed to be liquid assets.

I was under the impression that at least a portion of collateral for real estate development needed to be liquid assets.

Of course, what has changed in the credit recession is the amount required.

Yeah, so you're going to have to go into more detail for your Memorial Road hotel post to make sense to me.

Right now I'm doubtful that a hotel could be financed at all. But if it were possible about the best expectation would be 60% of the hard building cost meaning cash equity would be required for land, site development, and soft cost.

Even then there would have to be at least one alternative to repay the mortgage that did not depend entirely on the success of the hotel.

Hotels are getting financed - to some degree. Read my story to understand why we're not seeing more hotels being built in Bricktown

If you are referring to your June 8 article, they are only being financed with public backing which we have been discussing on here. Otherwise, which article are you referring to?

One problem with public financing is that, unless it is 100% of the needed amount which is rather unlikely, it cannot be included when examined by other possible lenders. For one thing it has to be reaffirmed every year by whatever authority issued it and for another thing there is the very real possibility of chapter 9 bankruptcies.

Well, of course, and that it why municipalities are generally very reluctant to undertake such ventures. But, if a city is going to invest hundreds of millions into a convention center, it will take on such projects. Denver did it and Dallas did it. As with any business venture, there is a possibility of bankruptcy - thats the risk of being a lender and why there are interest rates charged.