Arden Group Acquires 243 KSF Office Center, 258-Room Hotel in Dallas
- Jul 26, 2013
Arden Group of Philadelphia made its first purchases in the Dallas area this week – the 258-room LeMeridien Galleria hotel and the Atrium at Office Center, a 10-story, 243,109-square-foot office building in Las Colinas, Texas. Prices paid for the acquisitions, made through its affiliated discretionary fund, Arden Real Estate Partners I, were not released.
Arden Group bought the office building from the lender Capmark Financial, which had foreclosed on the building in late 2011.
“We bought it way below what the prior loan was,” Craig Spencer, CEO of Arden Group, told Commercial Executive Property. “It was a really good asset that was suffering from a lack of attention and lack of capital.”
The Class A-/B+ office building, which is 51 percent occupied, is near State Highways 114 and 161 and approximately four miles from DFW International Airport. Arden Group plans to rename the building Tower 1320 and to make about $3 million in renovations. Upgrades will be made to the exterior, lobby, lighting, elevators and common corridors. Spencer said they will put in a conference center and create “beautiful, elegant seating areas in the lobby” to create a communal atmosphere.
“We’re really repositioning the asset as a true Class A asset in the market,” he told CPE.
Spencer said Arden Group has been looking in the Dallas area for office properties for the past 10 to 12 years. He noted that the firm bid unsuccessfully on the Thanksgiving Tower in downtown Dallas that was recently sold by Berkadia to an investment partnership headed by Woods Capital Management L.L.C. The 50-story tower had gone into foreclosure in February.
“We’re looking at other assets in Dallas. I could see us making future acquisitions in that market,” he added.
Spencer said Arden Group is under agreement for an office property in Atlanta, where it is also looking at another possible office acquisition.
Arden Group bought the Dallas hotel, located adjacent to the Galleria office towers and the Galleria mall in the Galleria North submarket, with joint venture partner HEI Hotels & Resorts of Norwalk, Conn. An HEI affiliate owned the property, which is an all-suite hotel with more than 3,800 square feet of meeting space. It also has an indoor pool, whirlpool, fitness center, business center and onsite dining. The joint venture plans $3 million in upgrades.
“It’s not a major repositioning, but we will continue to update the asset,” Spencer told CPE.
HEI, operator of multiple LeMeriden branded hotels, will continue to manage the property.
“The strategic alliance will allow us to draw on the combined strengths of our two organizations to maximize the economic potential of this great hotel,” Steve Mendell, president, acquisition and development at HEI, said in a joint news release.
Spencer said the acquisition, the fourth hotel purchase for Arden Group in the past nine months, is consistent with the firm’s strategy of investing in top 20 U.S. markets with robust job growth. But he noted that unlike most of its other investments, it was not a distressed property. Spencer said Arden Group, which is the majority owner in the JV, was attracted to the deal because of the location, the lack of new hotel construction in the submarket and increasing RevPAR that is expected to approach 2007 levels by 2014.
“We like everything about that area and about that market,” he said.
“Arden’s strategic asset management oversight combined with HEI’s management expertise will allow us to increase RevPAR and achieve our operational goals as well as enhance appreciation of the asset over time,” Spencer added.
The Dallas hotel purchase comes about one week after Arden Group acquired the DoubleTree Suites by Hilton Philadelphia West, a 253-room all-suite hotel in the Philadelphia suburb of Plymouth Meeting, Pa. The property, located about 15 minutes from downtown Philadelphia on a 7.9-acre site, was acquired from the lender, an affiliate of LNR. The price was not released but Arden Group is planning $6 million in renovations at the hotel, which has more than 8,000 square feet of meeting space, an indoor pool, business and fitness center and onsite dining options. The upgrades will include adding a new restaurant, according to a news release. Hostmark Hospitality Group will manage the hotel along with Arden Group’s asset management team.
In October, Arden Group made back-to-back hotel purchases in Atlanta and Orlando, Fla. The firm joined with Carey Watermark Investors and Marcus Hotels & Resorts to acquire the Westin Atlanta Perimeter North, an upscale, 372-room hotel, for approximately $57 million from an affiliate of DiamondRock Hospitality Company. The joint venture planned to invest $14 million in renovations of guest rooms and public spaces. An Oct. 4 press release noted that Arden Group had an approximately 32 percent indirect interest in the joint venture.
Also in October, Arden Group announced it entered into a joint venture with Eightfold Real Estate Capital and Hostmark Hospitality Group to acquire the Lake Eve Resort in Orlando. The 364-bedroom, all-suite luxury hotel is located on nine acres near the major theme parks. The joint venture said in a news release that it was investing $24 million in the property, including upgrading the guest rooms, lobby and pool area.
Arden Group acquires, develops and manages full-service hotels and office properties in major U.S. cities where demand is proven but assets are undervalued. The Arden Real Estate Partners I fund was launched in April 2012. Since its founding in 1989, Arden Group has purchased or developed more than $2 billion in real estate. Its property and management division has managed more than $5 billion of assets.