Paterakis set to sell his hotel at Travel Plaza Bask is reported paying $12 million for Best Western

Commercial real estate

March 20, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

H&S Bakery Inc. co-owner John Paterakis Sr. is on the verge of selling his 175-room hotel at the Baltimore Travel Plaza to an Atlanta company in a move that could provide capital for his proposed $134 million Wyndham Hotel at Inner Harbor East.

Bask Hotels Corp. declined to say how much it was paying for the Best Western at the East Baltimore travel plaza, but a hotel industry source said the purchase price was $12 million.

Salim Jetha, Bask Hotels' president, said the property is desirable because of its location between Baltimore-Washington International Airport and the city's convention center, as well as LTC its access to Interstate 95.

"We've had our eye on Baltimore for some time," Jetha said. "We like the area, and generally real estate there isn't overpriced as we've found in much of the Northeast."

Jetha said Bask Hotels hopes to complete the transaction for the 10-story hotel within a month. The Atlanta-based company owns lodging projects in Atlanta; Clearwater, Fla.; Jeffersonville, Ind.; Raleigh, N.C.; and Denver.

The 23-year-old company controls roughly 2,000 hotel rooms in all.

With the Best Western, Bask will take over a hotel that has a roughly 70 percent average occupancy rate. Hotel employees were informed last week that Paterakis was close to selling the project, though they were not told the identity of the buyer.

"They did say they were in serious negotiations," said Rick Diehl, a Best Western assistant general manager. "They did indicate, however, that the transaction would be good for the property."

Paterakis may use the proceeds to develop another hotel, a $134 million, 750-room Wyndham at his 20-acre Inner Harbor East project. Upon completion, the 31-story project would be sold to Patriot American Hospitality Inc., a Dallas-based real estate investment trust.

Paterakis, who obtained the Best Western as part of a $4 million purchase from a MNC Financial Inc. real estate holding company in 1991, did not return several telephone calls for comment on the sale.

When completed in 1987, the Best Western was the centerpiece of a $30 million project that includes a 400-seat dinner theater, a 200-seat restaurant, fast-food outlet and gasoline station on nearly 14 acres.

Because the Best Western has been well maintained, Jetha said, the company will need to invest less than $1 million to upgrade the former Quality Inn. The hotel also contains 15,000 square feet of banquet and meeting space.

While Jetha declined to confirm the $12 million sale price, lodging industry analysts said the company may be overpaying for the hotel.

"It sounds pricey to me, though I don't know the exact financial condition of the property or what amenities are with it," said Tom Fox, president of T. J. Fox & Associates Inc., a Kansas City, Mo.-based hospitality consulting firm.

"But there's a lot of capital available to buy hotels today, and with occupancy and average room rates up, hotels are selling at a premium."

Still, Fox said typical full-service hotels outside downtowns sell for roughly $50,000 per room. The Best Western, by comparison, would be selling for $68,570 per room.

Pub Date: 3/20/98

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