A joint venture of private equity firms paid just under $55 million for a dual-flagged Hyatt hotel property that opened last year in North Scottsdale, Arizona, a market making a robust recovery from the pandemic.
KKR & Co. of New York and Riller Capital, based in Los Angeles, bought the 229-key Hyatt House and Hyatt Place property at 18513 N. Scottsdale Road for $238,000 per key from its developer, Salt Lake City-based real estate firm Gardner Batt, and other private investors.
The two-building hotel, operated by San Clemente, California-based Evolution Hospitality, opened near the famed Mayo Clinic Research Hospital in North Scottsdale more than a year ago, according to a statement from brokerage Avison Young, which represented the seller. The nine-story Hyatt House has 93 apartment-style suites with kitchens, and the five-story, 136-room Hyatt Place includes mainly single hotel rooms.
The property, which opened a year into the coronavirus pandemic, received multiple offers from investors, Avison Young principal Jay Maddox said in the statement. Hotels have been among the property sectors hardest hit by the pandemic, with some analysts projecting that full recovery from the health crisis could take until 2023 or later.
“This transaction is a testimony to investor confidence in both the affluent Scottsdale market as well the hospitality industry as travel demand for drivable destination hotels for both business and pleasure has begun to rebound strongly," Maddox said.
The property is near a cluster of life science and healthcare firms that include Mayo, HonorHealth Research Institute and Magellan Health. Scottsdale is also a major tourism draw with high-end shops and restaurants, championship golf courses and other attractions, including spring training for several MLB teams.
Occupancy collapsed to less than 12% in Scottsdale during the first months of the pandemic two years ago, but conditions are improving, with upscale properties more than 62% occupied on average, according to CoStar Market Analytics. Scottsdale's 88 hotels sold about 260,000 room night stays in January, a 63% increase from the same month in 2021.
For the Record
Avison Young principals Jay Maddox, Keith Thompson, Andrew Broad and David Genovese represented the seller. The buyer represented itself.