Buyer Seeks Financing on New Orleans Hotel
An AllianceBernstein partnership has struck a deal to buy the Hyatt Regency New Orleans and is seeking $325 million of debt financing.
The New York investment manager and its partners, local investor Berger Co. and Fulcrum Hospitality of Jersey City, N.J., have agreed to purchase the 1,193-room property from a group led by Ares Management. The exact sale price couldn’t be learned, but sources put it in the neighborhood of $395 million.
The buyer is in the market for floating-rate debt with a term of 5-7 years. JLL is pitching the assignment to lenders, while also advising the Ares partnership on the sale.
The deal would be New Orleans’ largest-ever hotel trade, far exceeding the $121 million record set in 2017. When the Hyatt Regency went on the block about three months ago, the expectation was that it could fetch as much as $425 million.
The hotel’s recent history is viewed as a dramatic comeback story. The property was damaged significantly by Hurricane Katrina in 2005 and was shuttered months later. Then-owner Strategic Hotels & Resorts of Chicago sold it in 2008 for just $32 million. The buyer was a partnership between AREA Property of New York and investor Christopher Robertson, who operates local firm Poydras Properties.
The AREA team conducted a comprehensive renovation of the 32-story building, at a cost of some $275 million, and reopened it in 2011. The upgrades doubled the property’s meeting and event space to 200,000 square feet, the most in the city. That includes a 50,000-sf exhibit hall. There’s also a mix of restaurants, a rooftop saltwater pool and a fitness center.
New York-based Ares Management assumed control when it bought AREA in 2013. In 2016, it refinanced the hotel with a $290 million debt package consisting of a $250 million senior mortgage from a group of banks led by Wells Fargo and a $40 million mezzanine loan from Square Mile Capital.
Financials for the Hyatt Regency were unavailable. On average, upper-upscale hotels in New Orleans were 76.9% occupied last year, up from 75.4% in 2017, according to STR. Room rates grew 1.5%, to an average of $175.16. That lifted average per-room revenue by 3.6%, to $134.77.
The hotel is at 601 Loyola Avenue in the Central Business District. It’s connected to the Superdome and several surrounding office towers, about a mile from the city’s French Quarter.