An Ohio private equity firm has acquired the Raleigh Marriott Crabtree Valley and plans to make major renovations to the 10-acre property off Glenwood Avenue.
Columbus-based Rockbridge Capital bought the 375-unit hotel for $26.15 million, according to Wake County property records. Rockbridge has hired Raleigh-based Concord Hospitality Enterprises to manage the hotel, which has struggled to fill its rooms in recent years in a highly competitive market.
Kevin McAteer, Concords vice president of sales and marketing, said plans call for significant renovations to the hotel. A Rockbridge official didnt return a call seeking comment on Wednesday.
Rockbridge, which invests solely in hotels, is a long-time partner of Concord and its founder and CEO, Mark Laport. Earlier this year the two companies formed a joint venture to purchase the Renaissance Meadowlands in Rutherford, N.J.
In the Triangle, Concord operates the Renaissance Raleigh and Hyatt House hotels at North Hills and is planning to open a Residence Inn by Marriott in Durham.
Rockbridge acquired the Marriott Crabtree from Cornerstone Real Estate Advisors, which paid $48 million for the property in February 2007. The deal exemplified the loose lending environment before the crash, as Connecticut-based Cornerstone borrowed $35 million of the purchase price.
Within two years, however, demand for hotel rooms had plummeted as both leisure and business travel dried up in response to the recession. Occupancy at the Marriott Crabtree dropped from 71 percent to 57 percent in the first six months of 2009, according to Trepp, which provides research and data on commercial mortgage-backed securities.
Cornerstone invested millions renovating the hotel in recent years, but as with many deals that closed at the peak of the market the debt on the property made the deal problematic.
In January of this year Fitch Ratings, the credit rating agency, reported that Cornerstones loan was being moved to special servicing after it was deemed to be in danger of imminent default. The balance on the loan as of Jan. 24 was $43 million, and the property was barely bringing in enough revenue to cover Cornerstones debt payments, according to Fitch and Trepp.
Rockbridges acquisition satisfied the outstanding debt on the property, according to property records.
The question now is whether Marriott Crabtree, built in 1981, can regain its footing. The hotel was one of the original full-service hotels in Wake County, but it has faced increasing competition in recent years as the countys hotel inventory has become more diverse.
A new Hampton Inn and Hilton Garden Inn also recently opened across Glenwood Avenue from the Marriott Crabtree, joining a handful of other hotels already in the area.
Thats one of probably six cluster areas of hotels in the county, said Loren Gold, an executive vice president with the Raleigh Convention and Visitors Bureau. Theyre all fighting for those rooms.
Gold said that while the Raleigh area is doing OK bringing in meetings and conventions that generate blocks of rooms, the competition for the so-called transient business leisure and business travelers remains fierce.
It is those customers that typically drive occupancy rates and increase revenues for Wake County hotels, Gold said.
The hotel occupancy rate for the Crabtree area was flat through the first eight months of this year at 66.4 percent, according to Smith Travel Research, a Tennessee company that tracks the lodging industry. Revenue per available room was $61.53, up just 2 percent.
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