UPDATE: Fairwood Capital In Agreement to Buy Peabody Little Rock

by George Waldon  on Thursday, Jun. 28, 2012 11:35 am  

Fairwood Capital LLC of Memphis is looking to add the largest hotel in Arkansas to its growing portfolio of hospitality properties.

The deal for the hotel includes having sole rights to provide banquet/catering services for the adjoining 200,000-SF Statehouse Convention Center.

An October 2011 appraisal indicated the property reportedly was worth $40 million.

The proposed transaction represents the second deal between Belz and Fairwood Capital. In 2010, Fairwood Capital bought the 144-room Hampton Inn & Suites in downtown Memphis from Belz.

The Peabody Little Rock is carrying about $23.8 million of debt held by the state's largest pension fund, Arkansas Teacher Retirement System. The loan matures in 12 years and originally totaled $28 million in September 2000.

During the past nine months, Peabody Hotel Group officials talked with ATRS about borrowing an additional $7 million to upgrade the property with high-definition televisions, new hallway carpeting, furnishings and more.

But those talks never reached fruition.

"We never could make that work," said George Hopkins, ATRS executive director.

The pension fund has more lucrative investment opportunities than offering low interest financing to match current lending rates. A property such as the Peabody Little Rock could attract an interest rate of 5.5 percent, depending on the credit worthiness of the borrower.

The ATRS loan is at 7.5 percent.

Competition

The luxury hotel has come under increased competition from newer downtown hotels such as the 120-room Courtyard by Marriott and 119-room Hampton Inn & Suites, both owned by McKibbon Hotel Group Inc. of Gainesville, Ga.

McKibbon is in the process of developing its third downtown property, a six-story, 107-room Residence Inn.

The Courtyard by Marriott at 521 President Clinton Ave. opened in November 2005 and the Hampton Inn & Suites at 320 S. Commerce St. opened in October 2008.

The Peabody Little Rock is the state's largest hotel by revenue, reporting $16.1 million in revenue, or $38,600 per room, in 2011. According to Arkansas Business' annual list of hotels (PDF), revenue for the Peabody declined nearly 3 percent from the previous year. 

 

 

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