California Company Buys Vegas Hotel, Plans Additional 500 Rooms
January 9, 2007
By Tonie Auer, Southwest Correspondent
California-based The Siegel Group added a 186-room extended stay property to its growing Las Vegas and Reno portfolio with the $15 million acquisition of Super Suites. The purchase includes an adjacent seven acres for future development.
Marketed for $25 million as recently as December, the property (pictured) at 3625 Boulder Highway in Las Vegas is owned by Buckley Trust in Las Vegas, according to the Clark County Assessor. The taxable value of the motel, alone, is around $7 million, according to the tax rolls. The value of the adjacent property was unavailable. Super Suites was marketed as a weekly/monthly apartment complex on 3.21 acres and was built in 1996.
Siegel Group information indicated that the company plans to develop an additional 500 units on the adjacent seven-acre parcel. SASCO Properties will manage the property which will operate under the Siegel Suites Extended Stay brand, which controls nearly 2,000 rooms in the Las Vegas and Reno markets.
“We are presently working on the entitlement process and estimate construction costs to be in the vicinity of $30-$35 million” CEO Stephen Siegel told CPN.
He said he envisions a possible mixed-use development with retail components for the project and said he believes once the vacant parcel is entitled, it will be worth more than $1 million per acre or up to $10.5 million for the entire site. Prior to the acquisition, Siegel said, Super Suites was being used as a monthly rental/apartment complex and was not maximizing the value potential.
“There is no other city in the United States that can compare in terms of real estate price and opportunity to Las Vegas” Siegel added. “The Las Vegas skyline is eclipsed by construction cranes working on high-rise developments and this same activity is occurring within the real estate market as a whole. Las Vegas is very business-friendly with no state tax, low workers compensation insurance rates, a vibrant economy that shows no sign of slowing and a population that is projected to double during the next 20 years.”
Las Vegas Convention and Visitors Authority reports indicate that motel occupancy typically falls 25 to 30 percent below hotel occupancy levels, with an overall occupancy rate of 89.2 percent reported in 2005, according to Appraisers of Las Vegas.com. Hotels reported an occupancy rate of 92 percent and motels reported an occupancy rate of 72 percent, however, Las Vegas Convention and Visitors Authority statistics published in January of 2006 indicated increasing occupancy levels in 2005 for motels over those rates reported in 2004 with hotel occupancy levels remaining stable, stated information at Appraisers of Las Vegas.com. Additionally, despite continued room supply increases in Las Vegas, overall occupancy rates in 2004 and 2005 exceed the 90 percent mark, the report stated.
The Siegel Group, Inc. is a commercial real estate and business development company in Studio City, Calif. The $15 million purchase financing is provided by First Regional Bank in California.