An out-of-town investor is returning to Denver to make its second acquisition in the area: one of the city's trendiest boutique hotels.
Stockdale Capital Partners, a Los Angeles investment firm, has closed a deal to purchase The Source Hotel and adjacent market hall for a combined $61.9 million, the investor confirmed to CoStar News. The acquisition includes the 100-room hotel at 3330-3340 Brighton Blvd. as well as the 45,000-square-foot food hall, a 300-stall parking garage and a 17,000-square-foot parking lot.
Zeppelin Development, the Denver-based seller in the deal, originally developed the property in the city's River North Arts District nearly a decade ago. The neighborhood, commonly referred to as RiNo, is home to a growing population that has spurred commercial development and transformed the former industrial neighborhood into one of the city's most desirable — and expensive — areas.
“It’s not been an easy decision, but I think the market is in the right place,” Zeppelin President and CEO Kyle Zeppelin said of the sale.
Hotel rates in the Denver area have climbed more than 36% over the past year, according to data from STR, CoStar's hospitality analytics arm. Even so, rates at The Source are almost triple the city's average of $135 a night. A weekend stay at the boutique hotel starts at more than $300 per night, according to the property's website.
The neighborhood's growing pool of high-end apartment complexes have also been pulling in more money lately. Rents in the RiNo area have climbed nearly 5% over the past year to average about $2,200 a month, according to CoStar data. By comparison, rents throughout greater Denver average a little more than $1,800 per month.
The deal marks Stockdale's return to the Denver area after the firm's $71 million acquisition in February of The Shops at Northfield, one of Denver's largest shopping centers.
While the firm isn't planning any sweeping changes to the boutique hotel, it said in a statement it would be rolling out a few tweaks to the property such as “refreshing guest rooms, re-imagining its rooftop restaurant, activating the hotel lobby experience and creating additional revenue drivers in the hotel’s retail space.”