The new owners of the Sheraton Raleigh Hotel in downtown plan to make significant improvements to the property, including upgrading the restaurant space along Fayetteville Street, the lobby and other common areas.
Oaktree Capital Management and Northview Hotel Group acquired the 353-room hotel this week for $20.236 million, according to Wake County property records. The seller was the Gencom Group of Miami, which bought the hotel for $22 million in September 2006.
“We’re very opportunistic and typically we like hotels that have a bit of an interesting story,” said Matt Trevenen, a partner with Westport, Conn.-based Northview. “This one we got really excited about the potential growth of the market and the potential upside through some strategic renovations.”
The deal is the latest sign of how attractive Raleigh and the Triangle have become to institutional real estate investors. The Sheraton sale also means two of downtown Raleigh’s four hotels will now undergo major renovations over the next year. Miami-based Sound Hospitality Management, which acquired the 202-room Clarion Hotel on Hillsborough Street last month for $9.35 million, plans to spend millions improving the property in the next nine to 12 months.
The Sheraton becomes the ninth hotel in Northview’s portfolio, which also includes the Sanderling Resort & Spa in the northern Outer Banks.
Trevenen said what makes the downtown Raleigh market particularly attractive is that it draws a diverse group of customers throughout the week.
“You have a strong corporate base and what we think will be a stronger corporate base going forward with Red Hat moving in and Citrix (Systems) moving in,” he said. The market also attracts groups attending events at the convention center, leisure travelers on the weekends and strong government-related traffic, Trevenen said.
The occupancy rate in the downtown Raleigh market so far this year has been higher than the rate for Wake County, the state and the United States, according to Smith Travel Research, a Tennessee company that tracks the lodging industry.
The rate in downtown was 63.6 percent through the first eight months of the year, up from 62.7 percent a year ago. Revenue per available room, a key industry figure, was $74.85, up from $69.75 during the same period last year.
Loren Gold, executive vice president at the Greater Raleigh Convention and Visitors Bureau, said Gencom made some improvements to the Sheraton’s rooms two years ago but those didn’t extend to the common areas.
“The Sheraton has been pretty strong but I think this really gives them a shot in the arm,” he said.
Gold is particularly excited because Northview has talked about giving the hotel a more urban feel, and doing more with the 4,600-square-foot restaurant space.
The Sheraton is the fourth hotel that Oaktree and Northview have purchased through a joint venture. Publicly traded Oaktree is based in Los Angeles and had $78.7 billion in assets under management at the end of June.