Downtown Sheraton sold to huge hotel developer/operator

[Pete]

American Property Management buys OKC Sheraton: San Diego-based company enters market with $38M purchase
by Darren Currin
The Journal Record
4/23/2007


Journal Record Photo
OKLAHOMA CITY – One of the nation’s largest hotel owners and operators has entered Oklahoma City’s surging hotel market by acquiring one of downtown’s hotel landmarks. San Diego-based American Property Management Corp. has completed the purchase of the 395-room Sheraton Oklahoma City hotel for approximately $38 million, according to Oklahoma County records.

Oklahoma secretary of state documents showed American Property Management Corp. was one of the primary owners of the 31-year-old hotel. It was unknown if the new ownership consisted of any additional investor groups.

American Property Management Corp.’s purchase of the Sheraton marked the company’s first hotel acquisition in the state. The company has been honored several times in recent years by various hotel and real estate publications as one of the fastest-growing companies in the hospitality industry with more than 45 hotels nationwide. In 2006, the company was ranked by National Real Estate Investor as the 14th-largest hotel owner in the nation.

According to the company’s Web site, more than $350 million in annual revenue has been generated by its growing portfolio of hotels that includes such brands as Holiday Inn, Wyndham, Hilton and Sheraton.

At a price of $96,582 per room, Peter Holmes, COO of HotelBrokerOne in Oklahoma City, said the Sheraton’s purchase was yet another example of the premium national hotel investors have placed on Oklahoma City’s growing hotel market.

“Oklahoma City continues to be the target of acquisition for many national corporations, especially with many national business and hotel publications labeling Oklahoma City as ripe for hotel purchase or development,” said Holmes. “It was not that long ago that Oklahoma City was redlined on the map and it was hard to get national investors to look at Oklahoma City.”

Even thought Sheraton’s high purchase price will certainly turn heads, Holmes added that the price still remained below replacement cost resulting in what he called “a fairly marketable deal.”

“When you take into account it cost north of $200,000 a room for the Skirvin renovation and between $110,000 and $120,000 a room for the Renaissance, the Sheraton price was below those costs,” he added.

Located at 1 N. Broadway Ave., the hotel was purchased from Meristar Hospitality, a real estate investment trust that owns 57 hotels and resorts nationwide. Meristar acquired the hotel in January 1998 for approximately $28.5 million as CapStar Hotel. Meristar changed the hotel brand shortly after its purchase from the Medallion to Westin. In 2004, the hotel changed brands once again to its current Sheraton name.

Holmes noted that the hotel’s change in brand from Westin to Sheraton was more a lateral move and did not have much effect on the value of the hotel. However, he explained that the Sheraton brand does tend to fare a little better than Westin in this region of the country.

Originally opened in 1976 as a Sheraton Hotel, the 262,836-square-foot property has undergone several renovations since its inception, the most recent of which was completed in 2004, consisting of $8.5 million of interior renovations.

It was unknown if any major changes are planned for the hotel as representatives from American Property Management Corp. were unavailable for comment.

[bombermwc]

I wish they would remodel the convention area of the hotel. It still looks very much 70's and looks very poorly taken care of. Meetings I've had there haven't exactlly been "pretty". It's so dark and brown and bleh.

[Kerry]

Maybe the new owners will tear down the mall portion and build a new tower on the site. A tower equal in height would bring the property to 800 rooms. Add a few more floors and it would be pushing 1000 rooms. If the Sonics relocate to OKC don't be surprised if it happens.

[Pete]

^ Yep!

The location of that property gets better all the time and at some point they are going to find a higher and better use for the 'Century Center' part, which has never worked over the last 30+ years.

[Kerry]

I think the time has come. The thing that will tip the bucket is when Clay Bennett holds a press conference at the Ford Center announcing the Sonics are moving to OKC. It will unleash a flurry of downtown construction that hasn't been seen since 1889. I think this purchase is an attempt to pre-position APM to be in the right place at the right time. If the Sonics don't move then they still purchased a good property at a good price. Plus, the Hornets are still in the wings.

[Drake]

This maybe should be its own thread, but flipping thru the AM dial this afternoon on 1340, I believe it was Dave Garrett (but not sure) was talking about a new convention center & a soon to announced 650 room hotel located south of the current I-40, but obviously north of the new I-40.

Have I just missed this? I know nothing been announced yet, but usually there is some chatter on here about it. Sorry if I've just missed it.

[TStheThird]

Look in the Core to Shore threads.

[Drake]

Thanks. That why I didn't start its own thread. Figured it was somewhere on here.

[BaconCheeseburgerDeluxe]

I wish they would remodel the convention area of the hotel. It still looks very much 70's and looks very poorly taken care of. Meetings I've had there haven't exactlly been "pretty". It's so dark and brown and bleh.

Looks like your wish just might come true....

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[Pete]

New downtown Sheraton owner sets sights on new ballroom, alliances

By Steve Lackmeyer
Business Writer

Conversion of the old Century Center Plaza into one of Oklahoma City's largest ballrooms and an alliance with other downtown hotels are among the changes being promised by the new owner of the Sheraton Hotel.

County records show the 30-year-old hotel, at 1 N Broadway, sold last week to San Diego-based American Property Management Corp. for $38 million. President and Chief Executive Officer Michael Gallegos said Monday his company sees the property as a long-term investment and is encouraged by the city's recent growth.

"I've been studying this market for over 10 years now, and for seven of those 10 years, this market did not show upward growth,” Gallegos said.

"When this opportunity arose with the Sheraton downtown, I got very excited. I really wanted to be in Oklahoma City. I enjoy Oklahoma City, I enjoy the people. And I like the economic upward trends of not just the hotel sector, but for the entire city.”

Other factors attracting Gallegos to the Sheraton included a $10 million renovation of rooms, its restaurant and lobby, and its proximity to Bricktown.

"Bricktown is very exciting, with all of its nightclubs, restaurants and cafes,” Gallegos said.

"It's creating an urban feeling Oklahoma City did not have previously.”

Gallegos said he also was encouraged by the recent opening of the Skirvin Hilton, which he sees as a potential ally, and not a competitor, in doing business downtown.

He thinks Oklahoma City is ready to compete with Denver, Dallas, Phoenix and Tucson for conventions.

"The Skirvin, being a beautiful property, bodes well for downtown, and I think the developers did a wonderful job on that property,” Gallegos said.

"The challenge is to unify with the Renaissance and Skirvin in concert to bring in conventions and larger group business. We have a beautiful convention center, and three comparable products to offer for a citywide convention.”

At 395 rooms, the Sheraton is downtown's largest hotel, but Gallegos described it as having "undersized” meeting and ballroom space.

Gallegos said he will aggressively overhaul the adjoining Century Center Plaza. Plans include conversion of the plaza's mezzanine into 10,000-square-foot ballroom and leasing the enclosed first floor to office and retail tenants.

"With the past ownership, they were not long-term holders,” Gallegos said.

"They really did not have anything to offer prospective tenants. In order to ask tenants to come in, you need to do improvements, to make the space beautiful. We're willing to do that.”

Gallegos is retaining 98 percent of the staff from previous owner Meristar, but immediately brought in a new manager: Bill Togle.

The new manager had high praise for the employees, noting the hotel last year received the highest ranking for customer satisfaction in the Sheraton chain.

"We have a great team here,” Togle said. "It's one of the things the company considered when it bought this. It's a great asset.”

Both Togle, who last managed the Nashville Hilton, and Gallegos promise they will encourage employees to take an active role in the community.

"Normally we sponsor Little League teams, Boy Scouts and Girls ... our people are paid to get involved in United Way, the March of Dimes, Muscular Dystrophy,” Gallegos said.

"We believe in giving back to the community.”

[jbrown84]

It's about time something was done with the Century Center. It's embarassing, frankly.

[y_h]

Interesting that they're still looking at using the first floor for retail and offices. I always found that a bit peculiar. Here you have functions going on upstairs on the mezzanine and you have pedestrian traffic milling around below. Granted, by the time I was acquainted with the Century Center the only off-the-street traffic was coming from people patronizing that crappy little snack bar, the newsstand or the Blazers' offices. Still, I'm not sure it's such a great idea to mix private function space with an open retail and office plaza. I suppose the anticipated rents from the first floor are necessary for the deal to make money.

[jbrown84]

I think they are making the retail street-fronting, with the large open area in the middle as the grand ballroom. The second floor is just a balcony wrapping around the open mezzanine.

[metro]

I sure hope they make the retail street fronting, otherwise its a joke as it's always been. I'd rather see them raze the place and build another Sheridan hotel tower to adjoin the current one. Such a prime spot with only a two story building on it. I am glad to see some renovations get done there, just wish they could see the potential that site has.

[y_h]

I think they are making the retail street-fronting, with the large open area in the middle as the grand ballroom. The second floor is just a balcony wrapping around the open mezzanine.

Aha. I know that as recently as 1991 there was a large ballroom on the second floor - OCU Law School's Gridiron dinner was there.

Street fronting retail would actually be a nice addition - There should be enough room there to put in a small, single story Barnes and Noble or Borders if they wanted to go that route.

[jbrown84]

I think part of the issue with razing it is that it is the parking garage for the hotel.

[jbrown84]

Aha. I know that as recently as 1991 there was a large ballroom on the second floor - OCU Law School's Gridiron dinner was there.

There is a ballroom on the second floor of the hotel, but then it opens out into what looks like a completely empty shopping mall complete with walkways and stairways to the ground floor. I think if they completely gut it inside there, it can become a really cool grand staircase leading straight down to the first floor and then you'd have a nice 2-story high ballroom with all the amenities.

[y_h]

There is a ballroom on the second floor of the hotel, but then it opens out into what looks like a completely empty shopping mall complete with walkways and stairways to the ground floor. I think if they completely gut it inside there, it can become a really cool grand staircase leading straight down to the first floor and then you'd have a nice 2-story high ballroom with all the amenities.

. . . or an exhibition area/pre-event concourse which is a hallmark feature of most major convention hotels. Either way, that sounds like the most logical use for that space. I like your thinking.

[jbrown84]

There already is a pretty good size exhibition area/lobby outside the current ballroom which opens on the current Century Center.

[Steve]

Just a clarification, because it looks like there's some confusion about the second floor. The owners say they will be enclosing the mall opening, so it's one huge ballroom area, free of posts and obstructions. There would no longer be any open area between the first and second floor.
-Steve

[Patrick]

Yeah, that's the way I took it. The opening from the 2nd floor looking down on the 1st floor will be closed, and the entire 2nd floor will be turned into a ballroom. Only the 1st floor would remain for retail, office use. Personally, I'd like to see the 1st floor converted to meeting room space as well, or if done right, street-side retail.

On the note of keeping Century Center for its parking, why not build a new hotel tower on top of the parking garage? If not feasible, tear down the existing Century Center, build a stronger foundation for a parking garage with hotel above.

[jbrown84]

So the ballroom would only be on the second floor? Is that right?

[Steve]

That is what they indicated yesterday. The owner said he is prepared to spend a significant amount of money to clean up the first floor and make it attractive for leasing to offices and retail.

[jbrown84]

Steve, did you get the impression the ground floor would still have the inside corridor, or would the retail/office space be street-fronting?

[Steve]

They weren't giving any further specific details, and I suspect that's just a matter of waiting for an architect to finish plans.