Omni Inner Harbor's price triples in just four years REIT acquires it again, for a lot more money

Downtown hotels

December 02, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

How white hot is investor interest in Baltimore hotels? Look no further than the Omni Inner Harbor Hotel.

As part of a deal to buy a pair of hotel and casino operating companies, a Dallas real estate investment trust has for the second time in four years acquired the twin-towered Omni, and ratcheted up the prices by which future sellers will measure downtown lodging property sales at the same time.

That's because in the four years since Patriot American Hospitality Inc. first bought the 707-room project for $17.5 million in September 1993, the price to buy the Omni has more than tripled. This time around, for instance, Patriot American spent $57 million for the 101 W. Fayette St. project.

"Baltimore is a significant convention city, and this is an asset that will immediately establish our presence in the market," said Suzanne Cottraux, a Patriot American spokeswoman.

But some analysts contend that the sale may not exactly represent a bellwether of the area's hotel market, because the Omni was one of 10 hotels that Patriot American acquired as part of a $485 million deal to buy Gencom Group Inc., of Houston.

"I wouldn't say the Omni is a barometer of value one way or the other, because what Patriot did was buy a company," said Rob Koger, president of Molinaro Koger, a Virginia hotel brokerage firm.

The Omni deal is likely to benefit both sides in the future, too, since the owner of Gencom -- which bought the Omni from Patriot American in December 1995 -- is the REIT's biggest single shareholder.

"The jump in price is a result of the increase in the bottom line for that property," said Lee Grossbard, a regional vice president of Gencom. "There's more volume and more profit, and the hotel market is just very hot right now. But it's true that Gencom and Patriot have always had a close relationship."

For Patriot American, the deal comes as it is fighting to develop a 48-story hotel in Inner Harbor East, which would carry the Wyndham brand name.

Pub Date: 12/02/97

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