New York-Based Firm Buys St. Paul, Minn., Hotels

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. October 14, 2008

By Gita Sitaramiah

Pioneer Press, St. Paul, Minn.

ST PAUL, November 23, 2005. Downtown St. Paul's two Radisson hotels are being purchased for $45 million by a New York firm with hotels and resorts from London to the red rock country of Sedona, Ariz.

The St. Paul Port Authority said Tuesday that a purchase agreement by New York's Trinity Hotel Investors to buy both the Radisson Riverfront Hotel and the Radisson City Center Hotel was approved. It was the highest offer, said Tom Collins, a Port Authority spokesman. Little information is available about whether Trinity will rebrand the hotels or make other shifts when the sale closes in February. As part of the deal, the new owner has agreed to retain 350 employees at both hotels, Collins said.

Trinity usually focuses on higher-end accommodations than the St. Paul Radissons and probably will give them a makeover, said Kirby Payne, a Rhode Island-based consultant and Minnesota hotel owner. "But the St. Paul market isn't going to change because someone does something radically different," he said. Trinity Principle Brian Martin said Tuesday that he won't comment until a sale is complete. But the Port Authority press release said the company expects to make an additional investment in remodeling both downtown hotels.

No discussions have taken place between the future owner and Carlson Hotel's Worldwide, which manages both Radissons, said Thomas Polski, a Carlson Hotels vice president. Carlson Hotels, part of Minnetonka-based Carlson Cos., owns the Radisson brand name. "The St. Paul market is important so we would be committed to be in that market in some form or the other but at this point it's not really our decision," Polski said. "It's an ownership decision."

Trinity Hotel Investors focuses primarily on 3- to 4-star hotels and luxury resorts in Europe and the United States including L'Auberge de Sedona in Arizona, Cadogan Hotel in London and La Posada de Santa Fe in New Mexico. The Radissons rate at around the 3-star level, said Steve Sherf, a senior vice president at GVA Marquette Advisors, a real estate consuoing firm in Minneapolis. He said the Radisson Riverfront caters to large groups attending high school tournaments and conventions. "That hotel has been instrumental in the success of the new convention center there," he said. The Radisson City Center is more geared to business travelers.

But both Radissons are event-driven and face big swings in business. The occupancy rate for downtown St. Paul hotels for the first half of this year was 55 percent, Sherf said. He called that number weak compared to the overall Twin Cities hotel occupancy of 65 percent. "It's stabilized but it's growing slowly," he said.

The 22-story Radisson Riverfront has 475 rooms and was built in 1966 under the Hilton name by SPH Hotel Company. A decade later, the Radisson Hotel chain became an equal partner with SPH and the hotel was renamed the Radisson Kellogg. In 1987 the Port Authority assumed half interest in the hotel with SPH and issued $17.5 million in revenue bonds to finance a major renovation of the hotel. SPH withdrew in 1993 and the Port Authority assumed full ownership after issuing $17.6 million in revenue bonds to pay off the outstanding debt. The hotel became the Radisson Riverfront in June 2000. The Port Authority spent $10 million renovating the hotel at that time.

The Radisson City Center was built by Carlson Real Estate and sold to a partnership that eventually closed the 251-room hotel in 1990. Capital City Properties reopened it in 1995 with $5.9 million in revenue bonds issued by the Port Authority. Capital City Properties also has approved the purchase agreement to Trinity. As part of the deal, Carlson Real Estate and the city will get portions of the net sale proceeds.

Downtown real estate observers think the potential hotel sales bode well. "The hotels play a very significant role in the viability of downtown St. Paul," said Bill Buth, president of the St. Paul's Building Owners & Managers Association.

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Copyright (c) 2005, Pioneer Press, St. Paul, Minn.

Distributed by Knight Ridder/Tribune Business News.