Colorado Real Estate Journal -
The new owner of the 474- room Red Lion Hotel Denver Southeast at Interstate 225 and Parker Road in Aurora is taking the hotel in two directions. The hotel’s east tower will become a 190-room Red Lion Inn & Suites, while the west tower will be a 291-room, full service Radisson hotel and conference center. Pandey Hotel Denver LLC, a wholly owned subsidiary of Pandey Hotel Corp., the U.S. division of CP Group New Zealand, bought the hotel from Red Lion Hotel Corp. for $13 million. The hotel is Pandy’s first Colorado asset. “The property itself was in very good condition. It was well located, and we felt that with the new management and the dual-brand situation, we would be able to increase the viability of the property and add value to the asset,” said John Andrews, asset manager. Denver-based Providence Hospitality Partners has been selected to operate the hotels. The west tower will undergo a $3 million renovation to include guest rooms, public areas and re-concepting of the food and beverage facilities. Renovation of the east tower will focus on guest-room renovations. Providence is considered a turnaround specialist for underperforming assets and has operated for clients including Bank of America, Lehman Brothers Holdings, Berkadia Commercial Mortgage and C.W. Capital. The dual brand will allow the owner to take advantage of two reservation systems to increase revenue and profitability, said Mark Darrington of CBRE Hotels’ Denver office. Darrington and Larry Kaplan, also of CBRE Hotels’ Denver office, handled the transaction with Chris Burdett of the hotel group’s office in Seattle. This is not the first time a double brand has been discussed for the Red Lion Hotel Denver Southeast, whose original eight-story tower was developed by noted Denver developer Bill Walters in the early 1980s. In late 2006, there were plans to spin off the 12-story tower of the hotel, which at that time was the Radisson Hotel Denver Southeast, to an independent brand. The owner instead sold the entire property for $25.3 million to Red Lion, which undertook an approximately $8 million renovation. Red Lion has owned the property since 2008. “We are gratified that an international hotel company has recognized the value of a Red Lion franchise. We have sold four hotels since June 2011, all of which have produced new franchise agreements. The sale of our Denver hotel helps us reduce debt and invest in our owned hotels in a manner which is meaningful to both guests and shareholders,” Red Lion President and Chief Executive Officer Jon E. Eliassen said in a statement. Andrews said Pandey has “very aggressive plans for the renovation and improvement of the property” and hopes to get started in December. The hotel will remain open during construction. Offering 25,000 square feet of meeting and banquet space, a restaurant, lounge, and business and fitness centers, the hotel is within walking distance of the Nine Mile lightrail station. It borders Cherry Creek State Park and has views of the mountains and downtown Denver. Kaplan said the Red Lion Denver Southeast offered “a lot of operational upside.” The listing drew good activity from out-of-state hotel groups and showcased CBRE Hotels’ international reach, he said. David Treadwell of CBRE Debt & Equity Finance arranged financing for the buyer, which was “somewhat challenging given the property does not have a ton of existing cash flow,” said Kaplan, adding the buyer needed money for renovation and is a foreign entity, so, “There were a lot of moving parts.” CP Group New Zelaland owns commercial, hotel and residential real estate in New Zealand, the Fiji Islands and the U.S. Its U.S. division owns the Doubletree Hotel in Cocoa Beach, Fla., the Baymont Inn & Suites in Las Vegas and the former Ramada Inn in Orlando, Fla. It is looking for additional opportunities in Denver, Andrews said.