An affiliate of The Axton Group (“Axton”) today announced the firm has closed on the acquisition of the Renaissance Austin Hotel for $70 million. The 492-room, full-service hotel in north Austin is one of the city’s largest hotels, with spacious guest rooms including 88 suites, many upscale amenities, and spectacular views of the Texas Hill Country and the downtown Austin skyline. The hotel features 77,600 square feet of indoor and outdoor meeting and event facilities.
Like all hotels across the country, Renaissance Austin Hotel’s occupancy is currently low as a result of COVID-19. The city of Austin is one of the fastest growing in the country, with booming growth in the technology, medical and biotech sectors, and other major tenants and employers.
Peter Oberndorf, Founder and CEO of Axton, said, “This investment is representative of the cyclical nature of hotel assets, which have been even more acutely impacted in this current environment than previous economic cycles given the dynamics of the pandemic. It is now our responsibility to reposition and enhance this property, guiding it on a path of recovery and ultimately leaving it in a better place than we entered. We look forward to making this vision a reality. We are seeking additional opportunities where we believe we can acquire assets and add value at an attractive entry basis, in robust markets with excellent long-term fundamentals and promising growth prospects.”
Austin has major and expanding tenants including Apple, Google, Hewlett-Packard, Cisco, Microsoft, Dell, 3M, University of Texas and the Texas State Capital government. The city is also a leading tourist destination historically hosting over 27 million visitors each year.
Andrew Slusser, Principal at Axton, said, “Our purchase of the Renaissance Austin Hotel reflects the reduced capital availability in the hospitality industry. We see great value at our point of entry and expect the property to return to and grow its pre-COVID earnings over the coming years.”
Axton is planning renovations to the hotel’s public spaces and meeting rooms that will position the property as a premier venue for the meeting and event business that the firm anticipates will gradually return in the post-COVID era. The immediate renovations call for significant improvements to the hotel entrance; a redesign of the lobby and the majestic atrium; creating more revenue-generating spaces, while maintaining functionality for group events, with the goal of offering a more attractive and modern look and feel for guests. Planned meeting and banquet space renovations will enhance the property and enable it to be more competitive with newer product as the market recovers.
The hotel will continue to be managed by Marriott under the Renaissance Brand.
The purchase price of the hotel represents more than a 50% discount to replacement cost. Axton is actively evaluating opportunistic investments across the U.S. from sellers seeking liquidity. The firm has a contrarian view that select properties in strong markets with high return on investment repositioning dynamics will allow for a return to equilibrium operating fundamentals.
Paul Hastings represented Axton in the acquisition and Eastdil Secured was the financial advisor for the financing, which was originated by an affiliate of Walton Street Capital, L.L.C.