“Sometimes properties can be sold subject to committee or board approval if the closing bid doesn’t meet the reserve, but it’s close. I think this is probably a failed auction because (the high bid) is significantly lower than the (owner’s) reserve.”
— Melvin Chu, hotel investment sales associate with Jones Lang LaSalle’s San Francisco office.
The Holiday Inn of Craig, which has been a mainstay at 300 S. Colorado Highway 13 in Craig since 1981, was put up for auction earlier this week.
The online sale attracted “two or three” active bidders from the region and fetched a high bid of $3,050,000 when the auction closed about 12:30 p.m. Thursday, according to www.auction.com.
The identity of the high bidder was not made public Thursday afternoon and is not likely to be released anytime soon because the high bidder failed to meet the owner’s reserve price.
“Sometimes properties can be sold subject to committee or board approval if the closing bid doesn’t meet the reserve, but it’s close,” said a representative with Jones Lang LaSalle’s San Francisco office, which is serving as Holiday Inn’s listing company. “I think this is probably a failed auction because (the high bid) is significantly lower than the (owner’s) reserve.”
The two-story, 152-room Holiday Inn of Craig was put up for auction by LNR Property, LLC, a real estate investment, finance, management and development company headquartered in Miami with offices in 12 cities worldwide, including Denver.
Though the property is still owned by Highway 13 Lodging, LLC, according to Moffat County Assessor’s Office records, GF Management, headquartered in Philadelphia, took over management responsibilities in November 2011 when the hotel went into foreclosure.
Representatives from LNR and GF Management were unavailable for comment Thursday.
The online auction began Tuesday with an opening bid of $1.5 million.
The low starting bid, coupled with the hotel’s reported net operating income of more than $490,000 and daily occupancy rates of 60 percent since February, attracted the attention of local investors, including Steamboat Springs resident Steve Dawes.
Dawes is a former CEO of Steamboat Resorts and a member of a local investment group.
Unaware of the owner’s reserve price, Dawes said anyone lucky enough to land the Holiday Inn of Craig at a bargain price of $1.5 million would see a significant return on their investment.
“Assuming you have no mortgage payment and no debt, the $490,000 NOI would basically be your net profit,” Dawes said. “At $1.5 (million), you’re looking at a 32.6-percent return on your cash. Pretty attractive.”
Hotels are often bought and sold based off the cost per room, Dawes said. With 152 rooms, a $1.5 million cost would work out to about $10,000 per room.
Even at $3 million, which cuts the potential return on investment to 16.3 percent and doubles the cost per room to $20,000, Dawes said the Holiday Inn is still an attractive deal.
But Dawes and his partners did not participate in the auction, deciding instead to turn their attention to another potential investment opportunity elsewhere in Colorado.
Representatives at Jones Lang LaSalle would not disclose LNR’s reserve price and would not comment on whether the reserve price would be adjusted or if the Holiday Inn would be up for auction again in the near future.
Click here to have the print version of the Craig Daily Press delivered to your home.