Sources say St. Regis deal worth $100 million total
September 9, 2010
ASPEN – The buyer of the St. Regis Aspen has pledged to invest $100 million overall in the acquisition and renovation of the hotel, according to sources familiar with the deal.
The purchase price is $70 million, and the buyer agreed to spend another $30 million to renovate the 179 rooms in the luxury property, said a source in the Aspen hospitality business and a second source knowledgeable of the terms. Neither source wanted to be identified because they weren’t authorized to speak about the pending deal.
Starwood Hotels and Resorts said it has a contract to sell the St. Regis Aspen to OptAsia Capital Co. of Bangkok, Thailand, according to a statement issued Tuesday. The sale is expected to be completed “on or about Sept. 30,” the statement says.
Starwood’s statement didn’t disclose the sale price, and a company spokeswoman declined comment Wednesday. The company will retain a long-term management contract as part of the sale.
A sale price of $70 million would place the cost at about $391,000 per room for the 179-room property.
The Aspen Skiing Co. purchased the more moderately priced, 126-room Limelight Hotel for about $38 million, or $301,000 per room in April.
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The St. Regis Aspen had an actual value of $79.5 million in 2010, according to the Pitkin County Assessor’s Office. There is conference space that helps attract group business, a ballroom for special events and a bar, restaurant and lounge in addition to the guest rooms. Another 98 hotel rooms were converted into 25 fractional ownership suites that weren’t part of the sale.
The St. Regis opened in 1992 as a Ritz-Carlton Hotel. The rooms haven’t undergone major renovations since opening.
Renovations aren’t cheap. The Skico spent $18 million on renovations of 86 rooms at the Little Nell Hotel prior to last ski season. The owners of the Hotel Jerome have approvals to spend between $45 million and $50 million on the 92 rooms there. That project is on hold.
The way the St. Regis sale is structured provides a couple of advantages to Starwood. First, it reaps $30 million of someone else’s money to renovate a hotel it will manage for years. Second, it reaps $70 million that it can use elsewhere in its global network of luxury hotels and resorts.
Starwood has engaged in a strategy since 2006 of selling hotels to focus on long-term management contracts and franchising deals. The St. Regis Aspen was put on the market in November 2008, just as the financial crisis was unfolding.
Randy Gold, a principal in Aspen Appraisal Group, said it’s nearly impossible to gauge how the recession affected the sale price, especially without knowing the terms of the sale.
“This certainly was not a distress sale,” Gold said. “But did the recession affect the sales price? Yeah. To what degree? I don’t know.”
The St. Regis, one of Aspen’s flagship hotels, is located near the base of Aspen Mountain. The ongoing affiliation with Starwood, which has 979 hotels around the world, would obviously be valuable to the buyer, Gold noted. The length and terms of the management contract could have affected the recorded sales price, he said.