The city of Phoenix has finally found a buyer for the Sheraton Grand Phoenix after enduring eight turbulent years in the hotel business.
Thayer Lodging's affiliate TLG Phoenix is said to be offering $300 million in cash for the Sheraton Grand Phoenix which is located near Second Street and Van Buren Avenue, based on a report published on KJZZ,
A city report also stated that Thayer Lodging, which is represented as TLG Phoenix in all public documents, would get a total amount of $10 million that would be coming from the hotel's capital replacement fund. The report further stated that TLG would pay $1 a year for 99 years to Phoenix as payment for the ground lease. This fee would Phoenix would lease the ground to TLG for $1 a year for 99 years.
The hotel has lost at least $29 million, and city officials estimate that number could climb to about $32 million with the sale. "Phoenix currently owes about $306 million on the 1,000-room hotel. Previous city estimates suggested the building's value ranged between $175 million and $225 million."
Thankfully, the offer made by TLG was greeted by city leaders with enthusiasm.
Councilman Bill Gates was "pleasantly surprised" by TLG's offer price. Gates is positive that the deal will "get rid of the financial risk" faced by Phoenix taxpayers.
"As the owner, we're exposing the taxpayer to the ups and the downs of the business cycle," Gates said. "I just think that this is a business that is better operated by the private sector."
According to Thayer's website, it has a portfolio of 13 hotels. Meanwhile, the international group is planning to open a 42-level hotel in Perth. It will feature 89 apartments and 196 hotel rooms. It is reported that it will have a base construction cost of $110 million.
The Sheraton and W brands are owned by Starwood Hotels & Resorts, Inc.
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