Phoenix Business Journal – Arbor Lodging Partners, a Chicago-based hotel investment and management company, purchased the AC Hotel Phoenix Downtown at the Arizona Center, the firm’s first investment in the Phoenix market.
The firm bought the 199-room hotel near Fifth and Van Buren streets for $65 million in a sale that closed Aug. 27, according to Maricopa County records.
“Phoenix has been a key target market for us for a while,” said Vamsi Bonthala, the CEO of Arbor Lodging Partners. “You can’t not see how fast it has been growing, but as we were digging into the market, we got really excited.”
Bonthala said Phoenix has had the reputation to out-of-state investors as being mainly a leisure market, but said he was excited to hear about all of the business and technology growth happening in the city, including Taiwan Semiconductor Manufacturing Co.’s massive plant in north Phoenix and the growth of the Phoenix Biomedical Campus, which is right near the hotel.
“We were intrigued by downtown,” Bonthala said. “Phoenix is the fifth-largest city in the country, but it has a downtown that is really starting to come into its own.”
AC Hotel Phoenix Downtown opened in February and was developed as a joint venture between LaPour Partners, NewCrest Image and Peachtree Hotel Group.
“This sale speaks to the optimism and strength of the downtown Phoenix market,” Jeff LaPour, president of LaPour Partners, said in a statement. “There is a lot happening downtown right now, and the investor appetite for new, high-quality, well-located, lodging assets in growth markets continues to increase in the post-pandemic economy.”
LaPour Partners is also a partner in the AC Marriott hotel at the Camelback Collective mixed-use development.
A pivot for Chicago firm
Bonthala said his company usually considers itself to be a value-add investor, tending to buy hotels that can be extensively renovated and repositioned. Buying a brand-new hotel is new to them, but he said the firm is interested in looking at other new hotels as investment opportunities.
The sale was brokered by NewGen Advisory.
“The sale of the newly opened AC Marriott continues to demonstrate that Phoenix downtown is a market institutional hospitality investors are actively seeking and willing to pay a premium for the right brands in the right location,” Suraj Bhakta, CEO of NewGen said in a statement. “As the most active hospitality broker in the Arizona market, NewGen Advisory, is proud of our work to support the buyer and seller of this transaction.”
Bonthala said the hotel’s proximity to the Arizona State University downtown campus, the Phoenix Convention Center, Chase Field and the Footprint Center made the hotel especially attractive.
The firm is also actively seeking more investments in the Phoenix market, he said, adding that the firm spends a lot of time and research looking at a new market before making an acquisition, so it is valuable to apply that knowledge to multiple investments. The firm is looking at other opportunities downtown, as well as Scottsdale and the Camelback corridor, he said.
Despite the pandemic and its wide-reaching effects on the hospitality industry, Bonthala said the company is encouraged by Phoenix’s trajectory and the slate of high-profile events coming to the city in the next few years, including the Super Bowl and the NCAA Final Four.
“Phoenix has been a market we’d been eyeing for a long time, and we think it has a ton of potential,” he said.