Hotelier finds sought-after opportunity in Henderson [Las Vegas Business Press]

Khem Babbar had always been interested in the hospitality industry and found an opportunity to enter the market in Las Vegas with the $5.1 million purchase of the former Holiday Inn on Boulder Highway, refurbishing and rebranding the 115-room motel as Best Western Plus.

He's already used to long hours, working 12 to 14 hours a day as marketing director for Intel Corp.'s emerging markets, a job that took him around the world.

Babbar, who founded City Hotels Group after retiring from Intel, looked at a number of motel properties near his home in Northern California before deciding on Las Vegas. He found one in Fairfield, Calif., for about $4 million, but it was an older motel that was starting to look worn, he said.

"This was the right opportunity from an investment standpoint," Babbar said during a tour of Best Western Plus before its Dec. 1 grand opening. "Sometimes you buy something and the upside potential is very low. Here, we have an opportunity to hit the ball out of the park."

Occupancy was around 20 percent and room rates were $35 to $40 a night when Babbar closed escrow on the property in April. Since then, he's doubled the occupancy rate and increased room rates to $79 and up. About two-thirds of guests are leisure travelers and one-third business travelers.

The property at 1553 N. Boulder Highway originally opened as a Holiday Inn in 2008. It has a restaurant and lounge with full bar, kitchen facilities, meeting room, business center and fitness center.

Babbar invested about $150,000 to meet standards required for the Best Western Plus flag, improving landscaping, repaving the parking lot, replacing linens, towels and pillows, and upgrading room amenities. He bought audio visual equipment, a podium and copy machines for the meeting room, and new chairs, lounges and tables for the pool deck.

"Just about all the plants were dead and just about every room had some kind of leak when I got the property," Babbar said. "When guests come in and see water stains on the ceiling or a split in the Sheetrock, it just looks ugly. I fixed the roof and repainted."

A $135,000 second-phase renovation includes remodeling the lobby with new furniture and an expanded bar, Babbar said.

The motel has about 20 employees, led by general manager Russ Day.

"Even though people look at this area and say, 'Oh, it's Henderson,' this area has a ton of potential for redevelopment and I already see that as one of the keys," Babbar said. "It's interesting the number of guests who just walk in and want a room. Boulder Highway still gets a lot of traffic. I have to make sure moving forward that we capture a larger market share."

At 38 percent of its original construction cost, the Best Western transaction is a good example of market corrections in Las Vegas, Colliers International managing partner Mike Mixer said.

"At this price, there was a small return on investment on the extremely low operating level at the time, well below its peer group," the broker said. "The big upside is to actively manage the property back to a normalized level."

The hotel industry as a whole is improving and major markets such as Las Vegas are seeing the bulk of the increase in business, Mixer said.

Las Vegas is on pace for 39 million visitors this year. Hotel occupancy has climbed to 88 percent and average room rates to $104, compared with a national average of 60 percent occupancy and $101 average room rate.

HUGHES CHEYENNE CENTER

Irvine, Calif.-based CIP Real Estate sold a 110,000-square-foot industrial building at Hughes Cheyenne Center in North Las Vegas for nearly $7.5 million, or $68.21 a square foot.

The buyer was Pacifica Real Estate Group, a subsidiary of Newport Beach, Calif.-based Buchanan Street Partners. The building is occupied by Cox Communications and Creative Light Source, both on long-term leases.

The building is part of a 2.2 million-square-foot portfolio of office and industrial assets purchased by CIP and Buchanan Street Partners from 2005 to 2007, along with 10 acres of improved land parcels.

Over the past four years, CIP and Buchanan sold 1 million square feet of property and about 5 acres in separate transactions. Kevin Higgins of Voit Real Estate Services represented the seller.

4G PLAZA

Los Angeles-based Primestor Development has acquired 4G Plaza, a neighborhood shopping center at 4215 E. Charleston Blvd., for $8.8 million. 4G Properties LLC was the seller.

The 79,000-square-foot center is 93 percent leased, anchored by El Super and shadow-anchored by Home Depot. Other tenants include Wells Fargo, Taco Bell, Big 5 Sporting Goods and Sprint.

4G Plaza, built in 1981, is at Charleston and Lamb boulevards, in the heart of a rapidly growing Hispanic population. Average daily traffic count exceeds 95,000 and more than 241,000 people live within a 3-mile radius.

Primestor plans to improve the facade design, develop a vacant pad on the site and improve the customer experience for people coming to the center, said Alan Araki, managing director of investments.

COMMERCIAL REFINANCE

Bob Ybarra of CB Richard Ellis Capital Market represented the owner of Red Rock Shopping Center on Craig Road in a $7 million refinancing of the 81,500-square-foot retail center. A life insurance company funded the 22-year loan at a 5.5 percent interest rate, fixed for the first 10 years.

Ybarra also represented the owner of the 124-unit Cha Cha Apartments at 604 E. Horizon Drive in Henderson for $5 million refinancing. A bank funded the five-year loan at 4.1 percent interest.