A Colorado-based private equity firm has paid more than $200 million for six downtown Walt Worthy hotels, including the historic Davenport and the new Davenport Grand.
Tom Kunis, a Spokane County resident, said the sale price is nearly double what was evaluated at the five hotels and the parking garage west of the Davenport Tower for the 2022 tax year.
“We had no such thing,” he said on Tuesday.
Partners KSL and The Worthys announced the sale earlier this month, but did not reveal the total price. Kunis said the sales bonds obtained by the county auditor represent the amount paid for the property and may not reflect other payments made by KSL, including property or trademarks.
Dave Black, chief executive officer and director at NAI Black, said the hotels’ total selling price would likely be at least double what was recorded in the county.
“I think it’s probably the biggest deal that’s ever come up in Spokane,” said Black, who was not involved in the sale of the Davenport property.
The sale price will likely include personal property within hotels and what is known in the commercial real estate market as “goodwill,” Black said, which includes things like brand name, reputation and future sales of the company. KSL has announced that it will retain the Davenport name on the hotels in Spokane, and will retain all hotel group employees.
Other similar real estate transactions in the northwest suggest that the sale of Davenport will be one of the biggest. Worthy himself sold his Rock Pointe complex in 2005 for $82.8 million. Four years ago, Tacoma-based healthcare giant MultiCare bought Rockwood Health Clinic and Deaconess and Valley Hospitals for $425 million.
Of the properties purchased by KSL’s partners in the Davenport deal, the Davenport Grand was the most expensive, with a sale price of $78.1 million. For Historic Davenport, the site of Worthys’ first hotel purchase in more than two decades, KSL paid $45.2 million, more than double the hotel’s appraised value this year, $21.2 million.
Kunis said hotel property values are based in part on market forces, noting that his office adjusts valuations based on available data. Some hotels report their income, others do not.
The COVID-19 pandemic has hit the hospitality industry hard, with four of the five Worthys-owned hotel closings for several weeks in 2020. As a result, many of their valuable hotels have been lost, as have other Spokane accommodations. On average, Spokane County hotels lost nearly 25% of their property value in 2021, Kunis said.
Kunis said selling Davenport would likely cause residents to adjust property values in the opposite direction.
“There is no good evidence for this,” he added.
The workforce in local hotels is also struggling to reach pre-pandemic levels, although unemployment is generally low in the county. According to the latest estimates from the Washington Department of Employment Security, jobs in the hospitality sector that are not associated with bars and restaurants are still 32% lower than in 2019.
This category largely includes hotel workers, said Anthony Anton, president of the Washington Hospitality Association.
“I think it’s great for people who have hospitality jobs in Spokane,” Anton said of the sale. “It also talks about the work of these people. You have a buyer who says we believe in what you’re doing, so keep doing it.”
Anton also said Worthys deserves a lot of credit for building a “great local brand.”
Black said the sale will likely boost Spokane’s already crowded commercial real estate market. He said NAI Black just had a better year than 2019, a sign that the city is ready to grow if the pandemic comes to an end.
“I think it’s just a trend,” he said. “Real estate markets are hot, all of them.”