The Texas owner of the Brown Palace Hotel and Spa, as well as the adjacent Holiday Inn Express, is putting both properties up for sale after they ran up a bigger tab than expected and stayed around longer than desired.
Crescent Real Estate, based in Fort Worth, Texas, has retained the commercial real estate brokerage firm Newmark to market the two properties, according to a report by BusinessDen, a news partner of The Denver Post.
Troy Furbay, Crescent managing director and head of hospitality, told BusinessDen that Crescent typically holds properties for five years, but that the COVID years had “disrupted everyone’s business plans.”
Crescent purchased the two hotels in 2018 from Dallas-based Crow Holdings, a subsidiary of Trammel Crow, for $125 million, and the investment fund holding the purchase is winding down. Crow Holdings had purchased the hotels in March 2014 for $103 million.
The Brown Palace was in the middle of a $10.5 million renovation when Crescent acquired it. Denver’s hospitality market was seeing strong growth. Crescent described the purchase as a “rare opportunity to own and operate a timeless and iconic hotel asset.”
But that was before the pandemic crushed bookings and sent the hospitality industry into a deep spiral. The Brown Palace, which is Denver’s second-oldest hotel after the Oxford Hotel, began showing its age in more profound ways after Crescent took over.
On Nov. 18, 2022, a basement chimney fire knocked the hotel’s boilers out of commission, forcing an unprecedented cancellation of the hotel’s popular Thanksgiving brunch. In late December, a pipe on the sixth floor burst, flooding a dozen rooms, a second-floor meeting room and Ellyngton’s, the hotel’s biggest restaurant, and disrupting holiday festivities.
A damaged front door required customized repairs and allowed cold winter air to infiltrate the lobby for weeks. Another broken pipe flooded the ballroom, which is located in the tower that hosts the Holiday Inn.
To cope with rising repair and maintenance costs, employees reported that hotel management began reducing service levels and cutting staff, replacing 10 of the hotel’s long-time bellhops and doormen with third-party valets. Hotel fares were cut to boost bookings, resulting in problems with drug use on the property and heightened security concerns.
The hotel lost its star ratings over time and fell in the ranking of Colorado hotels. As it deteriorated, so did the surrounding upper Downtown neighborhood, which has struggled with high office vacancy rates and lower foot traffic.
Crescent refinanced the property in early 2024 with $84 million in loans backed by Benefit Street Partners, LCP Group and Ares Management Real Estate. It eventually replaced HEI Hotel & Resorts as the property manager of the 234-room Brown Palace and the 231-room Holiday Inn Express.
Crescent continues to hold onto the Kimpton Hotel Monaco Denver, which is part of a different fund than the unwinding GP Invitation Fund that held the Brown Palace and Holiday Inn Express.
So who might be interested in buying the Brown Palace, given the difficulties that Crescent had with the property?
“Salvaged Stays” became a trending theme in hospitality last year, and more travelers are preferring to lodge in a place with a history and a repurposing story. While the Brown Palace involves a renovation rather than a conversion, it fits with the theme.
London-based Henderson Park, which recently acquired the Mandarin Oriental in Washington, D.C., and a portfolio of high-end French hotels, is a leader in that niche. So too is Miami-based Gencom, which specializes in acquiring luxury hotel and residential properties and operating them under high-end labels like the Ritz-Carlton, Four Seasons and Rosewood.
Those options, however, only make sense if the Brown Palace can regain its status as a top luxury brand, not just in Denver, but nationally. And there is the “dual-brand” problem. The Brown Palace’s “mediocore sister,” the Holiday Inn Express, could scare away buyers interested in a high-end repositioning, given that the two properties share backend systems.
Other firms, however, might still be interested even if the cachet of the two properties has moved down market. AWH Partners, a New York firm that combines capital, ownership and operations, has a track record in taking over hotels that need a heavy lift in rebuilding mechanical systems and modernizing their operations.
In November 2024, AWH, which has a $2 billion portfolio, purchased a dual-branded Residence Inn/Fairfield Inn & Suites hotel property in Broomfield, and it owns the Embassy Suites by Hilton in Colorado Springs.
Real Estate Investment Trusts (REITs) focused on hotels — Pebblebrook Hotel Trust, Xenia Hotel & Resorts and DiamondRock Hospitality — represent a second group of potential buyers.
Xenia owns The Ritz-Carlton, Denver, a 202-room luxury property that it acquired for $100.25 million in 2018. DiamondRock owns Hotel Clio, a 199-room high-end hotel in Cherry Creek North, as well as the Courtyard by Marriott Denver Downtown, a 177-room “upscale” property along 16th Street.
A wealthy individual or a family office represents a third group. Colorado’s wealthiest resident, Philip Anschutz, took over The Broadmoor in Colorado Springs in 2011, fulfilling a pledge he made to his parents when only 10 years old on a visit to the property that he would one day own it, according to an interview he gave to Forbes.
Anschutz, who has invested in preserving historic assets like the Pikes Peak Cog Railway, reportedly has invested hundreds of millions of dollars in expanding and maintaining the resort, according to an article that year in Links, a golfing magazine. The Brown Palace is the kind of historic rescue project that might draw his interest.
The Reuben Brothers, the Geneva-based family office of David and Simon Reuben, who are British nationals of Indian descent, has been snapping up trophy urban hotels, including the $425 million purchase of the W South Beach in Miami in October 2024.
Denver is home to one of the leading boutique hotel operators in the country — Sage Hospitality Group. Sage has a long track record in converting old buildings and turning around struggling properties, and it has strong Denver roots. Among the signature Denver hotels it manages include the Oxford Hotel, the Crawford Hotel at Union Station, Hotel Teatro and the Maven at Dairy Block.
Sage Hospitality historically preferred to manage rather than own, although its ownership arm, Sage Investments, has increasingly started taking more minority stakes.
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