Tamarack Capital Partners and DiNapoli Capital Partners sold the 110-room Hotel Teatro in Denver for $35.5 million ($322,727 per room) to RLJ Lodging Trustⁱ after reportedly spending a combined $6 million to renovate the property’s restaurant in 2014 and rooms in 2018.ⁱⁱ

The firms acquired the property in December 2006 for $31 million ($281,818 per room), ⁱⁱⁱ or $48.3 million in June 2024’s dollars, according to the Bureau of Labor Statistics’ CPI inflation tracker.^iv After nearly 18 years of ownership, the Tamarack and DiNapoli lost $18.8 million on the Teatro when accounting for inflation and $6 million spent to renovate the property.^v

Tamarack’s loss was buyer RLJ Lodging Trust’s gain; RLJ remarked in a press release announcing the sale that “[t]he acquisition price represents a significant discount to recent trades and replacement cost, validating our team’s capabilities and our advantage as an all-cash buyer to source high-quality acquisitions in this environment.”^vi

Reporting on the Hotel Teatro sale, data provider CoStar stated that “[t]he price per key was lower than other Upper Upscale hotels that have traded in the past two years despite the location being proximate to the other transacted hotels.” ^vii The Hotel Monaco Denver sold for $69.7 million ($369,048 per room) in December 2022, and the Limelight Denver sold for $150,600,000 ($753,000 per room) in February 2023. ^viii

DiNapoli Capital had another high-profile failure in April 2024 when it reportedly handed the keys to the 248-room Kimpton Alton Hotel Fisherman’s Wharf to its lender in a deed in lieu of foreclosure transaction.^ix According to the San Francisco Business Times, DiNapoli paid $45 million for the property in October 2018 and rebranded it from a Holiday Inn to a Kimpton in 2020.^x

In Q1 2022, San Francisco hotels were reeling from the ongoing impact of the pandemic; data provider STR reported that the San Francisco/San Mateo market reported the steepest decline in occupancy versus 2019 levels (-23.4%).^xi

But DiNapoli doubled down on the Alton property in March 2022, reportedly obtaining $85 million in financing from AB Carval and Ramsfield Hospitality Finance, nearly two times what it had paid for the property in 2018.^xii These lenders took over the hotel two years later.

Tamarack and DiNapoli’s capital partners, which include Artemis Real Estate Partners, Rockwood Capital, Apollo Global Management, Alliance Bernstein and others, should ensure that public pension funds and other limited partners invested in other hotel properties owned by Tamarack and DiNapoli receive a better return than the firms delivered at the Hotel Teatro, and consider the firm’s track record in determining whether to partner with them in the future.

UNITE HERE Local 11 is a labor union of more than 32,000 hospitality workers in Southern California and Arizona who work in hotels, restaurants, universities, convention centers and airports.

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ⁱ Records from data provider CoStar Group, accessed August 19, 2024.

ⁱⁱJessica LaRusso, Inside Denver’s Best Boutique Hotels , 5280, September 2018.

ⁱⁱⁱ Records from data provider CoStar Group, accessed August 19, 2024.

^iv Bureau of Labor Statistics CPI Inflation Tracker, https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=31&year1=200612&year2=202406.

^v As noted above, the property was acquired in December 2006 for $31 million. According to the Bureau of Labor Statistics CPI Inflation Tracker, $31 million in December 2006 has the buying power of $48.3 million in June 2024. $48.3 million minus $35.5 million sale price minus $6 million for renovations yields a $18.8 million loss.

^vi Press release, RLJ Lodging Trust Acquires Hotel Teatro in Denver, August 1, 2024.

^vii Records from data provider CoStar Group, accessed August 19, 2024.

^viii Ibid

^ix DiNapoli Capital forfeits Kimpton Alton hotel on SF’s Fisherman’s Wharf, The Real Deal, April 9, 2024.

^x Katie Burke, New details released on Kimpton's Fisherman's Wharf plans, San Francisco Business Times, Feb 12, 2020.

^xi U.S. Hotels – March 2022 Commentary, STR , May 2, 2022.

^xii DiNapoli Capital forfeits Kimpton Alton hotel on SF’s Fisherman’s Wharf, The Real Deal, April 9, 2024.

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